Loan against property(LAP) belongs to the secured loan category where the borrower gives a guarantee by using his property as security. The loan is given as a certain percentage of the property’s market value, usually around 50 per cent to 75 per cent. You can normally take a loan against your self-occupied or rented residential property. This could be a house or even a piece of land (non-agricultural land) or commercial shop. In case of a residential or commercial property, It should be a freehold property and have marketable value. It should be free from all encumbrances—free from mortgage or other charge on property. A freehold property is a property which gives full legal rights to the owners to live and use the property. Mortgage loan is specifically designed for an individual who already owns a property and is in need of borrowing some finances.
You can take a LAP against an already mortgaged property: If you have a property on which you already have a home loan outstanding, you can still take a LAP on the same property.
Terms & Conditions
Eligibility Criteria : Anyone who owns property can have a loan against property. Salaried individuals and self employed professionals and businessmen can borrow against property. Lenders need to be satisfied about the repayment capacity. Different lenders have varying criteria to who they will lend based on annual income, firm where employed, length of service, age, number of dependents, assets and liabilities, credit history as per CIBIL,repayment track record, market value of property etc.
Need of Property loan : Loan against Property can be taken for following purposes:
- Expanding your business
- Getting your son/daughter married
- Sending your son/daughter for higher studies abroad
- Funding your dream vacation
- Funding medical treatments
- Project Financing
- Working Capital
Property Loan Range : The loan amount depends on the market value of the property and on the borrower’s income. The property—prime security with the bank—is valued by the bank approved valuers and the loan amount is usually 50% to 75% of the market value of the property. The minimum loan amount is Rs. 50 lakh, while the maximum loan amount varies from bank to bank usually upto 50crs
Repayment Period Options : The maximum tenure of the loan repayment is generally 10-15 years. Repayment to the lender is done on equated monthly installments basis through electronic clearing service mandate or post dated cheques. The EMI comprises principal and interest rate.
Time Required For Loan Disbursement: The average time required for loan disbursement is 3-15 days subject to satisfactory and complete documentation and completion of all relevant procedures
Documents Required At The Time Of Application Following are the documents that lenders require at the pre-approval stage:
- Proof of Age -Pan Card/Passport/Driving license
- Residense Proof
- Office Address Proof
- ITR with computation for last 3 yrs
- Copy of Bank A/C statements for the last 12 months
- Copy of latest credit card statement
- Passport size photograph
- Legal Existence proof & Registered Office Address -(Sale Tax/Service tax/ Vat Registration)
- Auditor`s report with annexure & Form 3CA/ 3CB & 3CD for last 3 yrs
- Balance Sheet & P & L A/c for last 3 yrs
For Salaried Employees:
- Form 16 of last 3 years
- Latest pay slips
- Letter from employee