What is a loan against property?| Loan Against Property
A loan against property (LAP) is precisely what the name implies. It is a loan given or disbursed against the mortgage of property. The loan approved is a certain percentage of the property’s market value, generally around 40 per cent to 60 per cent. This falls under secured loan type where the borrower gives an undertaking by keeping his property as security.
Loan against Property can be availed for the following purposes
- Expanding your business
- Getting your son/daughter married
- Sending your son/daughter for higher studies abroad
- Funding your dream vacation
- Debt Consolidation
- Funding medical treatments
What are the eligibility criteria to get a loan against property?
This criterion will vary from one bank to another. However, from various factors, the universal factors are:
- Your income, savings, debt obligations
- Cost/value of the property mortgaged
- Your repayment track record for other loans, credit cards, etc.
Documents required | Loan Against Property
Most banks and financial institutions normally necessitate the following documents:
- Application form with photograph
- Identity and Residence Proof
- Income Proof
- Last six months bank statements
- Processing fee check
Normal interest rates and tenure for repayment
Interest rates on loan against property vary from 12 per cent to 15.75 per cent, and the loan term can be up to 15 years.
There are two types of interest rates | Loan Against Property
Fixed rate of interest: In this, the rate of interest remains the same for the complete duration of the loan.
Floating rate of interest: Here the interest rate changes as per prevailing market rates. The rates are normally published on the lender website and could vary periodically.
Who can apply?| Loan Against Property
You can apply independently or mutually for a Loan Against Property. All owners of the property will have to be co-applicants in the loan. Conversely, all co-applicants need not be co-owners.
A loan against property is one of the best ways to avail money and meet financial crisis. It is essential to keep in mind that in this loan if the borrower is not able to pay the loan completely, the bank or the financial institution can take ownership of the mortgaged property.
Your property is one of your best assets. It holds the key to making your dreams come true!