Loan against Property

Loan against Property (LAP), also known as mortgage loan, allows consumers to raise funds by leveraging their residential, commercial or industrial properties. Like unsecured personal loans, LAP can also be availed for meeting both personal and business needs other than speculative purposes. Banks and HFCs offer loan against property starting at low interest rates for tenures of up to 20 years. The loan amount for LAP can go up to 70% of the property’s market value, depending on the lender and the credit profile of the borrowers. Many lenders also offer Lease Rental Discounting (LRD) facility, which allows consumers to avail loan by pledging the rental receipts of their tenants.

Eligibility Criteria for Loan against Property

To apply for a loan against property, you must meet the required eligibility criteria. While the eligibility criteria for availing LAP varies from provider to provider, below are some general conditions that must be fulfilled to apply for loan against property:

Residential Status	Resident Indian and Non-resident Indian
Minimum Age Limit	18 years
Maximum Age Limit	70 years
Employment Type	Salaried, Self-employed Professional and Self-employed Non-professional
Minimum Salary	At least Rs. 12,000 per month
Net Annual Income	At least Rs. 1.5 lakh p.a.
Work Experience	At least 1 year in the current organisation
Eligible Loan Amount	Up to Rs. 25 crore
Loan to Value (LTV) Ratio	Up to 75% of property value
Credit Score	Preferably 750 and above
Property Type	Residential, Commercial and Industrial

Before applying for mortgage loan, use loan against property EMI calculator to know how much EMI you can afford on a certain loan amount, interest rate and tenure. Your loan against property EMI should not put strain on your monthly expenses. Once you find the EMI, loan amount and tenure that you are comfortable with, click the Apply Now button to proceed for the loan against property application process.

Documents Required to Apply for Loan against Property

• Proof of Identity (Passport Copy /Voter ID card /Driving License /PAN Card)
• Proof of Residence (Ration card /Telephone Bill /Electricity Bill /Rental agreement /Passport copy /Bank Passbook or Statement /Driving License)
• Proof of Age (PAN Card /Passport /any other certificate from a statutory authority)
• Proof of Income for Salaried (Copy of Form 16, latest payslips, IT returns (ITR) of past 3 years, and investment proofs (if any)
• Proof of Income for Self Employed (Details of ITR  of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details and Proof of Business Address)
• Property-related Documents (Title Deeds including the previous chain of the property documents, Nil Encumbrance Certificate on the concerned property, approved plan [if applicable])

Read Also: The complete list of documents required for loan against property

Loan Against Property Processing Fees & Other Charges

Below are some of the general fees and charges that may be applicable to your mortgage loan.

Processing Fees	1% – 2% of loan amount
Administrative Charges	Rs 5,000 + GST or 0.25% + GST, whichever is lower
Part Prepayment Charges	Floating Rate: Nil Fixed Rate: Up to 4% on outstanding principal
Foreclosure Charges	Floating Rate: Nil Fixed Rate: Up to 2% on outstanding principal
Penal Interest	Usually at 24% p.a. (2% per month on the overdue installment/s)

FAQs

Q1.  Is it mandatory to have a co-applicant for availing LAP?

A co-applicant for a loan against property is mandatory only when the property being mortgaged is owned by more than one person. In such a case, all co-owners of the property need to apply as co-applicants.

Q2. What types of properties are accepted by lenders providing Loan Against Property (LAP)?

Different lenders have different criteria for the type of property to be accepted against a mortgage loan. However, mostly all financial institutions accept the residential, commercial or industrial property. It is important to note that the physical condition and age of the property may affect its acceptance by the financial institution.

Q3. What is the maximum loan tenure available under LAP?

Mostly, the tenure of a loan against property goes up to 15 years. However, this may vary from one lender to another.

Q4. Can NRIs avail loans against the property?

Yes, there are several financial institutions that offer loan against property to NRIs.