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Key Features:

  1. Collateral Requirement: The borrower must pledge a residential, commercial, or industrial property as collateral to secure the loan.
  2. Loan Amount: The loan amount is generally a percentage of the property's market value, often ranging from 40% to 70%.
  3. Interest Rates: Interest rates for LAP are usually lower than those for unsecured loans like personal loans due to the lower risk for the lender. Start from 9.15%.
  4. Tenure: LAPs typically come with longer repayment tenures, ranging from 5 to 20 years, depending on the lender and borrower’s profile.
  5. Usage Flexibility: Borrowers can use the loan amount for various purposes, including business needs, debt consolidation, education, or personal expenses.

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Loan Against Property (LAP)

Information you should know

Benefits:

  1. Lower Interest Rates: Compared to unsecured loans, LAPs generally have more favourable interest rates start from 9.15%.
  2. Higher Loan Amounts: Because the loan is secured by property, borrowers can often access larger loan amounts.
  3. Longer Repayment Period: This can result in lower monthly EMIs, making it easier to manage repayments.
  4. Continued Property Ownership: The borrower retains ownership and can continue using the property while repaying the loan.

 

How it works:

  • You borrow money from the bank by mortgaging your property.
  • The bank gives you a loan amount up to a certain percentage (usually around 60-75%) of the property's value.
  • You repay the loan amount with interest over a fixed tenure in EMIs (Equated Monthly Instalments).

Uses of LAP:

  • LAPs can be used for various purposes, including meeting personal needs like funding a wedding or education, or business needs like working capital or expansion.
  • Debt consolidation: You can use a LAP to consolidate multiple high-interest debts into a single loan with a potentially lower interest rate.

Benefits of LAP:

  • Compared to unsecured loans, LAPs typically offer larger loan amounts and lower interest rates since the property acts as security for the lender.
  • Longer repayment tenures compared to other loan options.

Eligibility for LAP:

  • Generally, salaried individuals, self-employed professionals, and businesses can apply for LAP.
  • Banks and lenders consider your credit score, income profile, and the property's value while determining your eligibility and loan amount.

Who Can Avail a Loan Against Property in India?

Salaried Individuals

    • Permanent employees of government or private sector companies.
    • Professionals such as doctors, engineers, and teachers.

Self-Employed Individuals and Business

    • Business owners.
    • Professionals like CA, Doctor, Architect and Lawyers  
    • Freelancers and consultants.
    • Partners in firms.

Pensioners

    • Retired individuals with a stable pension income.

Agriculturists

    • Farmers and landowners with a steady income from agricultural activities.

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