Loan against property
A Loan Against Property (LAP) is a secured loan where you pledge your property—residential, commercial, or land—as collateral to obtain funds from a bank or financial institution. The loan amount typically ranges from 40% to 80% of the property's current market value, depending on the lender's policies and the property's condition.
Key Features of LAP
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Secured Loan: Your property serves as collateral, reducing the lender's risk.
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Flexible Usage: Funds can be used for various purposes, such as business expansion, education, medical emergencies, or debt consolidation.
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Lower Interest Rates: Compared to unsecured loans like personal loans, LAPs generally offer lower interest rates.
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Longer Tenure: Repayment periods can extend up to 15–20 years, depending on the lender.
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Ownership Retention: You continue to own and use the property, provided you meet the repayment obligations.
Benefits
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Higher Loan Amounts: Due to the secured nature, lenders are willing to offer larger sums.
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Lower EMIs: Extended tenures can lead to more manageable monthly payments.
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Quick Processing: With proper documentation, the approval process can be swift.
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Versatility: Suitable for both salaried individuals and self-employed professionals.
Considerations
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Risk of Property Loss: Failure to repay can lead to the lender seizing the property.
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Processing Fees: Lenders may charge fees ranging from 1% to 2% of the loan amount.
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Documentation: Requires thorough documentation, including property papers and proof of income.
Major Indian Banks Offering LAP
Bank | Interest Rate (Approx.) | Maximum Tenure |
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HDFC Bank | 8.95% – 10.25% | Up to 15 years |
ICICI Bank | Competitive rates | Up to 15 years |
Axis Bank | Competitive rates | Up to 20 years |
Bajaj Finserv | Starting from 9.40% | Up to 17 years |
For residents of New Delhi, numerous banks and financial institutions offer LAP services. It's advisable to compare interest rates, processing fees, and other terms before selecting a lender.