Wish to Take Loan Against Properties? Here is What You Should Know

Your Loan Against Property

If you are planning to take a loan due to any financial urgency, then you should definitely consider the option of a loan against property or LAP. Just as the name suggests, taking loan against properties involves keeping a commercial or residential property with the lender to generate the required sum of money. Considered as a secured form of raising money, what makes these loans highly preferable is that you can get a high loan amount at a low-interest rate, with no restriction on usage.

In addition, the value of the property that you wish to mortgage determines the total amount of loan you can take, and at the same time, the lender first carefully analyses every aspect associated with the property to make sure that it is not linked with any kind of dispute. Although the property is offered in the form of collateral, the rights of ownership completely remain with the borrower as only the transfer of interest takes place. However, in case you fail to make the repayments on time, the lender is authorized to sell the property and recover the losses.

Do you meet the eligibility criteria for LAP?

• The applicant should be a resident of India and should have the documents to verify the same.
• Although it may differ from one lender to another, for self-employed individuals, the age bar is between 25 to 70 years, whereas, for salaried individuals, the age should be between 33 to 58 years.
• The eligibility for a loan also relies heavily on the credit score of the borrower and hence, the borrower must maintain a positive credit score and a flawless payment history.
• The applicant must provide all the required documents such as identity proof, residential proof, salary slip and bank statements of the last 6 months along with all the papers of the property you wish to offer as collateral.

A few benefits of taking a loan against property

• Easier to get approved – Lenders are always eager to provide loans to those individuals who offer collateral as this reduces their chances of experiencing any kind of loss. As a result, in the case of loan against properties, the documentation to approval and disbursal process becomes quite simple and quick.
• Low-interest rates – As mentioned before, a secured loan reduces the risk of the lender and hence, the loan is offered at a lower interest rate as compared to the unsecured alternatives. However, the lender carefully examines your credit score, payment history, income, and several other things to assess your repayment capacity. Usually, the lenders charge you an interest of 12% or 15%.

• Pre-closure convenience – Another noteworthy benefit of LAP is that it allows you to clear the loan sooner than the pre-decided term. However, you must keep in mind that if the loan was approved on a fixed interest rate, then you may have to pay a certain pre-payment penalty.


To sum up, by taking loan against properties, you can continue to use the property while using the loan amount for several requirements and most importantly, while comfortably paying for the EMIs. However, before signing the agreement, you must read the terms and conditions carefully to make sure that your property does not suffer any kind of risk.


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