Loan Against Property


Also known as LAP in financial sector, is a secured loan availed by mortgaging the property. The amount of loan varies between 40-60% of the current market price of the property being mortgaged. Since the loan is secured, the interest rate is comparatively less and the process of getting the loan is also quite simple. There are different type of LAP, viz.,

Loan against self-occupied/ rented/ vacant residential property

Loan against rented/ vacant commercial property

Loan against Industrial property

Loan against residential / mixed use / commercial / industrial land property

Eligibility criteria to get a LAP depends upon your age, income (salary, business), savings, debt obligations, fair market value of the property being mortgaged and your track record of earlier loan payments (CIBIL score)

Documents required for the processing of the LAP are, application form with processing fee (1-2% of the loan amount or a fixed amount, whichever is higher), income proof (salary slip, profit loss statement), ITR form, bank statement, Form 16, ID proof (Aadhar card, Drivilng license, Voter’s ID card, Passport etc.) and residential proof (Ration card, PAN card, electricity/ phone bill etc). Depending upon whether you are salaried, self-employed professionals or businessman, some more documents may be asked for to prove the income and repayment capacity.

Interest rate on the LPA varies between 10-15% depending upon the amount and duration. The duration varies between 2-20 years or till the retirement age, whichever is earlier. Since this is a secured loan, processing is faster and only time which delays is, is the valuation of the property. Since the interest rate is low as compared to the personal loan or any unsecured loan, this has become one of the most popular loans after home loan.

However, if one is not able to repay the loan, as in other secured loan case, the property mortgaged is sold-off and the debt is paid.