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Basics: Loan Against Property (LAP)

 

 

The loan amount you can avail for this loan depends on the value of the property, which you place as your collateral for the loan. This can range anywhere between 1 lakh and 3 crores. This comes with the risk of giving up your home if you are unable to repay the amount in full. The financial institution has the right to auction your home to claim the remainder of the loan amount you owe them.

A fixed asset often provides immense value at an hour of need. LAP is one such means that allows you to convert a fixed asset as a source for emergency funds. Loan Against Property (LAP) is a good option to turn to in the case of planned expenses like funds for education, wedding, or a surgery, which requires hospitalization and funds. The rate of interest for a loan against property is lower compared to the other two options.

The loan amount you can avail for this loan depends on the value of the property, which you place as your collateral for the loan. This can range anywhere between 1 lakh and 3 crores. This comes with the risk of giving up your home if you are unable to repay the amount in full. The financial institution has the right to auction your home to claim the remainder of the loan amount you owe them.

The repayment tenure can be as long as 20 years and the interest rates are generally between 12% and 17%. Generally a LAP takes time to process, as the valuation for the property has to be completed and verified before the loan is sanctioned.

What purposes can I take a loan against property for?

Loan against Property can be taken for following purposes:

* Expanding your business
* Getting your son/daughter married
* Sending your son/daughter for higher studies abroad
* Funding your dream vacation
* Funding medical treatments

What kind of properties can I mortgage for a loan?

You can normally take a loan against your self-occupied or rented residential property. This could be a house or even a piece of land.

What is the eligibility criteria to get a loan against property?

This criteria will vary from one bank to another. However, from all the host of factors, the common factors that all banks look at are:

* Your income, savings, debt obligations
* Cost/value of the property mortgaged
* Your repayment track record for other loans, credit cards etc.

 

 

Source: Bank Bazaar

By vayaM CS