What is Loan Against Property (LAP) or Mortgage Loan?
Loan Against Property (LAP) or mortgage loan is a secured loan, wherein the property papers are kept as collateral with the fund-provider. The property papers are returned to the borrower, once the loan is successfully repaid. You can apply for a loan against a residential, commercial, and an industrial property.
Some of the common uses of a Loan Against Property are given below:
- Educational expenses
- Business expansion
- Marriage expenditures
- Medical emergencies
- Funds for travel, vacations, big-ticket purchases
- Higher studies
On loanbaba.com, you can get more information about why you should choose a property loan and its key features and benefits. You can also learn about the different options available and what is needed in order to apply for the loan. You can avail the loan on this website from the top banks and NBFCs in India.
Features of a Loan Against Property (LAP)
Below are some of the features of a property loan/loan against property:
- You can get up to 75% of the property’s current market value, as the loan amount. You can borrow between Rs. 1 lakh and Rs. 10 crores under this loan scheme.
- A loan against property implies a fixed or a floating interest rate. Currently, the lowest rate of interest on offer is 9.00%.
- Both salaried and self-employed individuals can avail this loan.
- The loan tenure is between 1 year and 15 years.
- Processing fee ranges from 0.50% up to 2% of the total loan amount. You can get exclusive discounts on Processing Fee if you Apply via Loanbaba.
- Top-up loan and overdraft facility could also be available.
Points to Consider Before Applying for Loan Against Property
Below are factors that you should keep in mind before applying for loan against property:
- The property in question must be located in India.
- You should be one of the owners of the property. Co-owners necessarily become co-applicants of the property loan.
- Loan against property is usually not provided to purchase or construct a house.
- The chosen property should be free from internal disputes, otherwise chances of your loan application being rejected is high.
- You may have to provide the end-use undertaking of the loan. The bank/NBFC can check for the actual usage of funds, anytime.
- A credit score of 650+ is considered favourable to sanction a property loan. Check for the CIBIL score on our website.
- Some of the basic documents you will require are PAN card, residence proof, Aadhar card, Voter Id, Passport, identity proof, employment proof, income proof, and documents related to the property etc.
Categories and Types of Loan against Property
|Type of Loan against Property||Loan to Value Ratio|
1) Loan against residential property
60% to 75%
2) Loan against commercial property
60% to 70%
3) Loan against industrial property
50% to 55%
Loan Against Property Interest Rates in India
Loan against property interest rate in India:
Up to 2% of the loan amount
Up to 15 years
As the financial institute perceives secured loan as that of reduced risk the interest rates of property loans are low and almost like the base rates. In India, the borrowing rate for loan on property starts from 9.00%. The interest rate could be either fixed or floating. The loan against property interest rates will differ from one bank/lender/NBFC to the other on grounds of your profile, income, need of loan amount, loan tenure, credit score and history, and other factors.
Eligibility Criteria for a Property Loan
Some of the eligibility factors are mentioned below:
- To avail mortgage loan, you must be at least 21 years of age.
- You must be one of the owners of the chosen property.
- You can be either salaried or a self-employed person with a good repayment history.
- If salaried, you should have a work-experience of at least 2 years.
- Monthly salary should be at least Rs. 25,000 and above.
- Your on-going EMIs will affect the Eligibility amount.
You can refer the Eligibility calculator below and find out how much amount can you borrow:
Documents Required to Apply for a Loan against Property
The documents needed for property loan differ as per the applicant’s financial profile: salaried, self-employed, or businessperson.
Property Related Documents
- Registered sale deed/past sale deed chains (each sale deed of the past sales of the said property from its first allotment)
- Copy of property agreement
- Conveyance deed
- Lease deed (if the property is leased)
- Latest house tax return proofs
- Approved building plan from the Municipal Corporation
- Share certificate (if the society is formed)
- Latest maintenance bills
- Latest electricity bills
Other documents required are as follows:
For Salaried Individuals:
- Form-16 provided by the current employer
- Past 3 months salary slips
- Identity proof such as Passport, Voter ID Card, Aadhar Card
- Recent passport-sized photographs
- Proof of residence
- Salary slips for past 3 months
- Salary account’ bank statement for the last 6 months
- A cheque for processing cost/administrative cost applicable by the bank/NBFC.
For Self-employed Businesspersons:
- Identity and residence proof
- Recent passport-sized photographs
- Educational qualification diplomas, certificates, degrees, and academic credentials
- Bank statements of last 6 months
- Past 3 years Income Tax Returns
For Self-employed Professionals:
- Identity proof and address proof
- Recent passport-sized photographs
- Certificates proving your qualification credentials related to academics
- Balance sheet and profit and loss statement of the company of the last 3 years
- Existence proof of business and its profile details
- Bank statement of last 6 months
- Company’s acknowledged Income Tax Returns and statements of past 3 years
- Licensing and registration certificate of the profession
Checklist to Apply for a Loan against Property by Loanbaba
Here is a complete checklist to remember, before you apply online for a loan against property on our website:
- Compare loan offers across banks and NBFCs, before selecting a mortgage loan scheme.
- Check your loan against property eligibility and EMI amount to understand your loan eligibility and total cost of the loan.
- The documents needed to apply for the loan must be submitted along with the filled and duly signed loan application form.
- The property chosen must be free of any legal issues.
- A non-encumbrance certificate (NEC) will be required. NEC confirms that the property is free of any financial liabilities and is not currently mortgaged.
Top Providers for a Loan against Property India
Today most of the private and public sector banks and NBFCs offer property loan to people in India. Some of the major providers are:
- LIC HFL
- State Bank of India
- Deutsche Bank
- HDFC Bank
- Axis Bank
- PNB Housing Finance
- ICICI Bank
Loan against Property EMI Calculator
You can use our FREE loan against property EMI calculator before applying for a mortgage loan in India. With EMI calculator property loan, you can get the following details:
- The right loan amount you need as per your income.
- A suitable interest rate on the loan.
- The loan tenure ideal as per your income profile.
Why Choose Loanbaba to Help You Find a Property Loan?
On Loanbaba, you will be benefited with unbiased comparison of loan against property schemes over different NBFCs and banks. Refer below some important features that will help you understand why to choose us to find the best loan against property schemes in India.
- You can get instant loan quotes from financial institutions about property loan. We give you the opportunity to compare and apply for the loan online. It takes less than 2 minutes to apply online.
- You can understand the loan against property requirement such as documents, eligibility, fees, charges, interest rate on one-page itself.
- You do not have to visit any bank or NBFC to apply for and avail the loan.
- If you meet the eligibility criteria, you will receive e-approval of loan in no time.
- The funds will be disbursed to your bank account after loan approval.
- You will get customized quotes based on your needs.
- You will experience a top-notch customer service.
Frequently Asked Questions about Loan against Property in India
Following are important FAQs for loan against property.
Property loan can be given on real estate properties which are used for residential, industrial, or commercial purpose. Loan on a vacant land is generally not provided, however, some financial institutes may offer funding against empty piece of land. Do remember that loan against property for industrial, commercial and residential purpose does not include agricultural lands. Property loan for agricultural land come under special schemes and offered by specific banks and NBFCs only.
You can get up to 60 percent to 70 percent of the property’s value as loan. However, some banks and NBFCs limit the amount to Rs. 5 crores. But, the amount of loan will vary as per your credit score and income profile, and other factors. The age of the property and your age and employment history will have a say on the loan amount. Your existing liabilities will also come into question.
Salaried individuals, businesspersons, self-employed professionals can apply for loan against property online. The loan is secured in nature and will not ask for any other asset than the property papers. If you find it difficult to attain the loan, you can try and add co-applicants and guarantors.
It is important that you have all the documents in place related to your property, personal profile as well as the finances. In case you do not have documented financial such as IT returns, then you may disqualify for the loan. However, since the loan is secured and you have a good repayment capacity, certain banks and NBFCs (not all), may go easy on the documents needed.
If the property is owned by many owners, and you apply for the loan against property, then all the owners become co-applicant. However, it is not necessary to have a co-applicant for the property loan. You and your spouse can co-apply for the loan. You may want to add a co-applicant to increase your eligibility for the loan, if the co-applicant can help better the financial profile needed to secure the loan.
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