Loan Against Property (LAP)

Today I will tell you about loan against property (LAP)

If you have a property that is free from any loan, then you can take a loan by keeping that property as collateral

What is loan against property?

A Loan against Property (LAP) is a secured loan availed against a commercial or residential property kept as collateral with the lender. As the funds come with no end usage restriction, borrowers can utilize the funds for various purposes such as business expansion, weddings, child’s education, etc.

Benefits of LAP –

Simple approval process
Attractive interest rates
Continuous ownership
Easy and hassle-free documentation
Optimum use of a property
Claiming the interest as expenses (only for business person)

Eligibility criteria for LAP

A loan against property is offered to the following individuals –

a) Salaried – An individual who is in permanent service in the government or a reputed company. Further, he/she should be above the age of 24 years at the time of loan commencement and up to the age of superannuation.

b) Self-employed Businessmen – Any individual filing Income Tax Return (ITR) and who is over 24 years of age at the time of loan commencement and up to 65 years at the time of maturity.

c) Self-employed Professionals – Professionals such as doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretaries, and management consultants can apply. The age criterion is similar to that of self-employed individuals.

Documents required for LAP

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Salaried Individuals	Self-Employed Professionals/Businessmen
Application form, photograph attached	Application form, photograph attached
Valid photo identity (such as Voter Id card, Passport, Aadhaar Card, Pan Card, Driving License)	Valid photo identity (such as Voter Id card, Passport, Aadhaar Card, Pan Card, Driving License)
Proof of current residence	Proof of current residence
Latest salary slips (minimum 3)	Proof of business existence, Certificates of educational qualifications
	For Professionals – Last 3 years IT returns (self and business), Last 3 years Balance Sheets and P&L statements. For Businessmen – The business profile, Last 3 years IT returns (self and business), Last 3 years Balance Sheets and P&L statements. List of Directors and Shareholders with their individual shareholding certified by a CA / CS in case of the business entity being a company. Memorandum and Articles of Association of the Company. A partnership deed in the case of the business entity is a partnership firm.
Bank statements of the last six months	Bank statements of the last six months – both business and personal in case of businessmen
A cheque for processing fee	A cheque for processing fee

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FAQs –

What are the types of properties against which LAP can be taken?

Self-Owned and Self-Occupied Residential Property
Self-Owned but Rented Residential Property
Self-Owned Piece of Land
Self-Owned Commercial Property
Self-Owned but Rented Commercial Property

Can I take a loan against the property for any reason?

Loans against the property can be taken for the following purposes. They are as follows –

For Business Expansion
Getting your son/daughter married
Sending your son/daughter for higher studies abroad
Funding your dream vacation
Funding medical treatments

What is the maximum loan amount a person can get in LAP?

The maximum loan amount a person can get against LAP is up to Rs 25 crore. However, the LAP should not exceed above 60% of the market value of the property. The maximum loan availed will vary from bank to bank.

What is the minimum credit score required to get a LAP?

The minimum credit score required to get LAP is a CIBIL score of 750 and more.

What can be the maximum repayment tenure and interest rate of the LAP?

The maximum repayment tenure of LAP is 15 to 20 years. Whereas the interest rate will vary from bank to bank but the interest rate will range somewhat between 9.80% p.a to 16.60% p.a.