Loan Against Property – 6 Things you should know

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You can use a Loan Against Property (LAP) to manage significant expenses, whether they are for personal or professional reasons.

This sort of loan is the most typical financial solution for enhancing a borrower’s chances of finalizing a real estate deal. It’s a form of loan that complements conventional financing and is intended for buyers who can’t get a full loan because of their income or other credit issues. The borrower’s deed of trust and/or title serves as security for the loan and the loan amount would often be up to 50% of the property’s worth. Real Estate-Based Loans have developed into a varied financial instrument in the real estate industry since the early 2000s.

Collateral security loan

Lenders provide loans to borrowers on basis of collateral security of their property for a mortgage loan.  The lender makes a loan to cover a portion of the purchase price and takes possession of the property. Those with poor credit or those who would otherwise be unable to obtain a conventional mortgage can benefit from this type of loan.

Though loans against property can be challenging and complicated, they provide several benefits for consumers looking for extra money viz reduced interest rates and less pre-closure costs.

In general, a loan against property is an agreement that enables a lender to extend credit in return for a borrower’s temporary permission to borrow money secured by their property. This implies that you can borrow against the value of your property if you need money for a business or personal purpose.

Qualifying criteria to apply for a Loan against property

The applicant must meet certain conditional limits

  • Age requirement – not below 21
  • The upper age restriction is between 65 and 70
  • People having a salaried or self-employed status
  • Minimum annual income of Rs.3 lakh
  • 1–5 years of experience is required
  • Interest rate varies from 9.80%per annum – 16.50%per annum
  • The maximum loan amount is up to Rs.25 crore
  • A CIBIL score of 750 or more always shows a good credit
  • The repayment period should not be longer than 15-20 years.

Interest rates

Lower interest rate: With secured loans, like that of loan against property interest rates will be lower than unsecured loans. Furthermore, having a strong credit score and credit history ie CIBL score increases the probability of acquiring a loan with a cheap interest rate.

Documentation procedure

The documentation and approval process are often simple and straightforward. In this context, the collateral is the property used to secure the loan and hence the liability of elaborate paperwork is limited. Owing to this, lenders can proceed with a simple paperwork process.


A flexible loan repayment period is the standard norm for most loans as these are secured by real estate. Depending on the financier you choose, you may be able to get a loan with a repayment tenure of up to 20 years.

Sustained ownership

The owner continues for a longer period unaffected as the Applicant need not be the owner. Since the property is attached, the ownership is transferrable, in the case of a debt against it.



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