When does one acquire a Loan Against Property (LAP)? During an unwanted medical emergency or catering to the expenses of a planned trip. A property is an asset that can be kept as collateral with the bank, as and when needed. After which, the amount is automatically transferred to your bank account. The choice of taking a Loan Against Property for a commercial or residential property is yours.
The disbursal rate levied by a potential lender is 60% of the market value. On the other hand, 90% is given to some, which highly depends on the eligibility criteria and property type. At the same time, you can apply alongside a co-applicant. This is if you need a larger amount against the collateral asset. The tenure provided for a LAP is for up to 15 years or till you retire. Consider looking into the terms and conditions of the loan, before you opt for one.
The Manager of a leading private bank said that you can apply for a LAP if you are the owner of a leasehold or freehold property. They are opted by many due to the hassle-free procedure of disbursement and attractive set of rates. This applies to employees who are Salaried or Self-employed.
When it comes to the eligibility criteria, the lender will guide you on the documents that need to be submitted. You are to present your property value, income and credit history to the lender. If the lender approaches you for additional documents, be quick to respond. A delay can lead to an unnecessary setback in your loan approval.
- KYC Documents
- Income Proof
- Bank Statement (past 6 months)
- Appointment letter
- Processing Fee (cheque)
A LAP user, Dinesh Singh said that a LAP was taken to cater to renovation expenses. The money received helped in building extra floors and was much needed. The interest rates that were levied were comparatively lesser than Personal Loans. EMIs are going in, and the additional floor is a benefit.
If you are a Salaried Individual, you need to be 33 – 58 years of age and must be working in either an MNC, public or private company. On the other hand, if you are a Self-employed Individual, you need to be 25 – 70 years of age and have a regular income in hand.
Let us look into the banking institutions providing affordable rates,
|Banks||LAP Rate||Processing Fee|
|HDFC Loan Against Property Rates||8.35%||0.25%|
|SBI Loan Against Property Rates||8.80%||1.00%|
|Citibank Loan Against Property Rates||7.45%||NA|
|PNB Housing Finance||9.80%||1.00%|
|Karur Vysya Bank||12.15%||0.50%|
Note: This is the updated version of Dec 2020.
Having provided the rates and criteria to you on a platter, making a decision will not be time consuming or tedious. You can accordingly choose the bank, as per your requirements. Do not rush it and take up a loan, if you are confident on repaying the amount.