Do you have long-term financial needs and don’t want to sell off your assets? A Loan Against Property might be what you need. A Loan Against Property (LAP)
is a secured loan that allows the borrower to access substantial funds while retaining the complete ownership of the property. In an LAP, the property, residential, commercial, or industrial, is mortgaged and serves as collateral for the loan. If you are planning to expand your business or renovate your home, LAP can be a practical solution. How Is It Different From Other Loans? Interest Rate: LAP is a secured loan and is backed by a tangible asset, which allows lenders to offer loans at lower interest rates than unsecured loans, like personal loans. Flexibility: LAP can be used for business, education, weddings, and even for repaying debt, contrary to home loans or car loans. LAP gives personal loan flexibility at lower interest rates. Loan Amount: The loan amount in a LAP is based on the property value plus income, while in other loans, the amount is limited to the specific purpose of the loan. LAP offers loans ranging from several lakhs to several crores, based on the eligibility of the borrower. Risk Factor: While LAPs are less risky for the lender, there might be a risk factor for the borrower, as defaulting can lead to property seizures. Eligibility For An LAP Lenders evaluate several aspects of the applicant’s profile. Eligibility is not solely based on income; it is a culmination of personal, financial and property-related factors. Salaried individuals, Self-employed professionals like doctors, Self-employed non-professionals like business-owners, partnership firms, LLPs, all can apply for LAP, provided they confirm consistent income and repayment capacity. While the property is assessed for its location, ownership clarity, condition, and legal compliance, the credit score also carries significant weight. The better these categories are, the more likely it is for the borrowers to get better terms of repayment. Also Read: Planning To Buy A Home? Here’s How Your Credit Score Determines Its Real Cost For a smooth loan approval process, prepare the necessary documents such as proof of identity and address, income-related records like salary slips or tax returns, and property papers like title deeds and sale agreements. For Self-employed applicants, additional business-related documents are also required. How To Plan Your Repayments? A Loan Against Property EMI calculator helps estimate monthly EMIs by factoring in the loan amount, interest rate, and tenure. EMI calculators are easily available online upon search. It is always advisable to manage your finances and prepare the necessary documents before applying for a LAP. (Disclaimer: This article is meant solely for informational and educational purposes. The views and opinions expressed are those of individual analysts or brokerage firms and do not reflect the stance of Times Now. Readers are advised to consult certified financial experts before making any investment decisions.)
