Loan Against Property

A loan against property (LAP), also known as a mortgage loan, allows you to borrow money by pledging your property (generally residential or commercial) as collateral. Here are some key features of loan against property:

1. Collateral: The property offered as collateral should have clear ownership and should be free from any legal disputes. The value of the loan is typically a percentage of the property’s market value.

2. Loan Amount: The loan amount depends on the value of the property being pledged.

3. Interest Rates: Interest rates for LAP are lower compared to unsecured loans like personal loans because the property acts as security.

4. Loan Tenure: The tenure of a loan against property is usually longer compared to other types of loans, ranging from 5 to 20 years. However, it can vary depending on the borrower’s eligibility.

5. Purpose: LAP can be used for various purposes such as funding business expansion, financing education, medical expenses, debt consolidation, etc.

6. Eligibility Criteria: Lenders evaluate the borrower’s eligibility based on factors such as income, age, credit history, property value, and repayment capacity.

7. Repayment Options: Borrowers can choose from various repayment options such as equated monthly installments (EMIs), bullet repayment (principal is paid at the end of the loan tenure), or flexible repayment schedules depending on the lender’s offerings.

8. Risk of Foreclosure: If the borrower defaults on loan repayment, the lender has the right to foreclose on the property and recover the outstanding amount by selling it.