What is Loan Against Property?
Customers can get financing from financial institutions by mortgaging their property. This type of financing is known as “Loan Against Property” (LAP).
Customers can mortgage any type of property be it institutional or industrial property, residential property, or any plot of land. The amount of loan on such property ranges between 50% to 75% of property value (also known as Loan to Value ratio).
Benefits of LAP:
- Used for business expansion purpose
- For meeting immediate financing needs (like working capital need), LAP can be availed
- LAP can also be used for renovation of house, expansion of house, etc.
- Interest rate on LAP is lower than Personal Loan as LAP is a secured type of loan
Documents required for LAP:
|Identity Proof (Any two)||Address Proof (Any two)|
|PAN Card (Mandatory)||Utility bill (Example: Electricity bill, Telephone bill etc.)|
|Aadhaar Card||Aadhaar Card|
|Voting Id Card||Rent Agreement|
|Driving Licence||Lease Agreement|
- Loan Application form duly filled and signed
- Copies of all property documents that can establish the chain of ownership for the past 30 years
- Encumbrance certificate for 30 years
- Property tax paid receipt
* Salary slip of last 6 months.
* IT return of last 3 years.
* Form 16 of latest Financial Year.
* Bank statements of last 6 months.
* Employment Certificate from current employer.
|For Self Employed:|
* Registered Partnership deed (in case of partnership firm)
* Memorandum of Association (MOA) / Articles of Association (AOA) (in case of companies)
* Latest shareholding pattern (in case of companies).
* Last 2 years financials with Audit report.
* Last 12 months banking of all bank accounts.
* Repayment Track Record (RTR) of existing loans, if any.
* Property documents.
* Shop Establishment Certificate.
* GST Registration certificate.
* Declaration that borrower, Company or any of its Directors have not been debarred / blacklisted / penalized by any Stock Exchanges / SEBI/ RBI (in case of listed companies)
Eligibility for availing LAP:
- If the applicant is salaried, then he/she should be having minimum job experience of 3 years
- The self-employed applicant should have minimum business experience of 3 years
- The age of borrower at the time of application should be above 21 years
Interest & Other Charges of LAP:
- Interest rate on LAP ranges between 10% to 14%
- Processing fees ranges between 1% to 1.5% of the loan amount
- Prepayment charges upto 2% of outstanding loan amount
- It is compulsory to take the insurance of the property mortgaged
Purpose of availing LAP:
- Business Expansion purpose
- For meeting short term working capital requirement
- Renovation of home
- Expansion of home
- Medical emergency
- Personal purpose