what is loan against property?

Hello. I would like to help you understand what is the loan against property. I have availed of the LAP loan and can believe it is a bit difficult for anyone to understand it well in the first go. I faced the same problem until my friend gave me a simplified explanation. So, here is all you need to know about this loan type.

What is LAP Loan?

LAP is a term in loan which stands for Loan Against Property. As you can understand from the term itself, this is a type of loan which is approved against a property, which is provided as collateral. Now, this property can be a house, an owned land or even a commercial one. The asset, which is a property in this case, stays with the loan lender till the time the borrower pays the full amount of the loan.

What Documents Required for Loan Against Property?

Let me share the documents needed for you to apply for a LAP. The documents vary for a salaried individual and a self-employed individual. 

1. Address Proof: Ration Card, Telephone Bill, Electricity Bill, Voter's ID Card (Only one)

2. Identity Proof: Voter ID or Employer ID

3. The most recent bank statement or passbook, which shows the salary or income being credited for the past 6 months.

4. Salary slip for the past 6 months where all the deductions are visible.

5. Form 16 for the last 24 months.

6. Document copies of the property, which will be provided as collateral for the loan.

1. Address Proof: Ration Card, Telephone Bill, Electricity Bill, Voter's ID Card (Only one)

2. Identity Proof: Voter ID or Employer ID

3. Legal financial statements from the past 3 years.

4. The most recent bank statement or passbook, which shows the salary or income being credited for the past 6 months.

5. Document copies of the property, which will be provided as collateral for the loan.

This is all I had to say regarding, what is the loan against property. I hope this helps you!

Loan Against Property is a secured personal loan that you can take by providing your property as collateral or security. Interest rates for a “loan against property” scheme usually range between 8.45 % p.a. to 22 % p.a. Generally, you can take loans of up to Rs. 25 crores for a tenure of up to 20years with LAP. Now that you know about what is loan against property, let’s read about the factors affecting LAP interest rate:

• Profile of the applicant – The interest rate depends upon your income, occupation, age, etc.

• Type of property – The interest rate depends upon the type of property and its market value.

• Credit Score – You are required to have a credit score of 700+ if you want to take a LAP at low rates of interest.

• Loan Tenure – The interest rate also depends upon the repayment tenure. For instance, if the repayment tenure is short, the rate of interest will be high.

• Property Documents such as NOC from society, allotment-possession letter, Copy of original sale deed, etc.

• Address Proof such as Aadhaar card, Electricity Bill, Passport, etc.

• Identity Proof such as Driving License, Passport, PAN card, etc.

• Income Proof such as the Sales Tax Certificate, Shop Act License, Latest Income Tax Return Certificate, qualification certificate, certificate of practice, audited financial sheet, salary slips, Form 16, etc.

You can go to the website of your bank to apply for the loan online.

I hope now you know about the loan against property meaning.