What is Loan Against Property?

​​​A Loan Against Property (LAP) is a secured loan option sanctioned against an asset that serves as collateral. Individuals can provide owned land, commercial premises, or a house as an asset to avail this loan.​​

Besides understanding what a Loan Against Property is, it is important to note that there is no restriction on how the borrower uses the amount sanctioned through this loan. It can be used to meet any personal or business requirements, and the Loan Against Property interest rates are competitive and beneficial to the borrower.

• Purchasing or constructing a new house (down payment)
• Home renovation
• Purchasing high-end equipment
• Restocking inventory
• Replenishing working capital
• Debt consolidation

Additionally, compared to unsecured credit options such as personal loans, a Loan Against Property offers a higher loan amount for an extended tenor at lower interest rates.

With this credit option, avail of up to 70–75% of the property’s (collateral asset) prevailing market value as the loan amount. Applicants have to submit the property ownership documents, along with other relevant ones, to secure loan approval. After verification and loan approval, the sanctioned loan amount is transferred to the applicant’s account. The asset in question and property documents remain with the lender as collateral until the entire borrowed sum is repaid.

Loan for Lease Rental

In this type of financing, a property that is a source of rental income can be pledged to raise funds. In Lease Rental Discounting, the funds are offered against the rental income that is likely to be received from the property. Accordingly, the rent paid by the tenant goes straight to the lender.

Loan for Commercial Property

This particular  type of Loan Against Property allows borrowers to pledge an asset as collateral to purchase a commercial property. It proves useful for traders or business owners and enables them to switch to better and more spacious office space, a factory, or even a warehouse.

Loan Against Commercial or Residential Property

This loan option allows raising funds against an owned commercial or residential property to meet funding requirements. The sanctioned loan value depends entirely on the property’s market value.

*Terms and conditions apply

• Relatively long repayment tenor: The repayment tenor of LAP can last up to 17 years.
• Lower interest rates: LAP offers relatively low rates of interest (starting as low as 10.10%* p.a. for salaried and professional applicants) when compared to unsecured loans such as personal loans, where the rate of interest is usually high.
• Lower EMIs: Longer tenors translate to lower monthly spendings in the form of EMIs. This greatly helps bring down the burden of loan.
• Easy to avail: LAPs are secured loans where lenders keep your property as security. Hence, lenders have lesser risk to hand over the loan. This ease is transferred to the applicant who then gets to avail a loan without much procedure.