All you wanted to know about LAP Loan
October 20, 2020
Loan against property is a credit borrowing facility that allows the loan borrowers to borrow funds from lenders like banks or NBFCs.The loan is also called a mortgage loan. It can be borrowed by both self-employed and salaried people to fund their professional and personal expenses. A mortgage loan can be borrowed for any of the property types, whether its commercial, industrial or residential. The loan against property can be taken for different purposes like business expansion, to fund a child’s education, to manage wedding expenses, vacation abroad and also for medical emergencies. However, these loans do not offer the end-use of the loan amount, as the reason for taking the loan is to be disclosed to the lender, unlike a personal loan.
LAP loan is offered by multiple lenders in the market, that include both private and public sector banks and even NBFCs that are the Non-Banking Financial Corporations. All these lenders charge different interest rates and processing fee based on there terms and conditions. The LAP interest rate begins from 8.70%. The interest rate on the loan against property is linked to the external benchmarks like the repo rate, as per the Reserve bank of India’s policy dated 1st October 2019. The processing fee, on the other hand, is up to 1% of the loan amount. Some of the top lenders that provide the loan against property are SBI, HDFC, Citibank, Axis Bank, ICICI, Indiabulls, and PNB Housing Finance, amongst others.
However, it requires one to fulfil certain eligibility criteria, which are listed in the table below:
| Eligibility factor | Condition |
| Age | Minimum: 21 years maximum:65 years |
| Loan tenure | Up to 20 years in most cases |
| Income | Salaried: Rs 40,000 per month Self-employed: Rs 3 lakhs per annum |
| Work experience and age of business | Salaried: Minimum work experience of 3 years Self-employed: Business should be a minimum of five years old |
| Loan to value ratio | Usually between 60-70% |
| Credit score | 650 and above |
Apart from the eligibility factors, to avail a loan against property, one also needs to fulfil the documentation requirements, as listed in the table below:
| Identity proofs | Aadhar card, PAN card, Voter ID card, Driving licence, passport |
| Business certificates (for self-employed) | PAN card, partnership deeds in case of partnership firm, practice certificate, trade license, registration certificate of the firm |
| Address proof | Voter Id card, driving license, passport, utility bills like electricity, water, gas and telephone, rent agreements |
| Age proof | PAN card, driving license, birth certificates, school or college leaving certificate |
| Income proof | ITR returns and bank statements |
Availing a loan against property is easy, as one can apply for a LAP loan through both the online or the offline medium, as per his or her convenience. The loan is to be repaid with the EMIs, that can be planned well the Mortgage loan EMI calculators that are available online. Thus, a loan against property is a beneficial credit facility that helps people make the best use of the prior investments made in real estate assets.
Summary:
A LAP loan or loan against property is a mortgage loan through which people can borrow money from lenders by keeping their real estate property as collateral. The loan against property is for both salaried and self-employed people and can be taken across various lender like Banks or NBFCS. The borrower must choose a lender out of all based on his convenience. Different lenders provide the LAP loan on different interest rates that currently begin from 8.70%. Apart, lenders usually charge a processing fee as well to maintain the documentation charges on loan against property that is up to 1% of the loan amount. A borrower can apply for a LAP loan through any of the mediums that is through the offline or the online methods. However, to apply for a LAP loan meeting, certain eligibility and documentation requirements is necessary. These are stated in the tables below:
Documents for LAP
| Proofs for Identity | Aadhar card, Voter ID card, passport, driving license, PAN card |
| Proofs for Business and firms (for self-employed) | PAN card, practice certificate, trade license, partnership deeds in case the loan application is made through a partnership firm, registration certificate of the firm |
| Proof of residence | Voter Id card, driving license, passport, utility bills like gas, electricity, telephone or water, rent agreements and lease agreements |
| Proof of age | PAN card, driving license, college or high school leaving certificate, birth certificates of the loan applicant |
| Proof of income | ITR returns of minimum past 3 years and bank statements |
Eligibility for LAP
| Eligibility Parameter | Eligibility condition for LAP |
| Age of the loan applicant | Minimum age of 21 years and maximum age up to 65 years |
| Loan tenure | Up to 20 years in most of the lender’s case |
| The income of the loan applicant | Salaried: Rs 40,000 per month Self-employed: Rs 3 lakhs per annum |
| Work experience and vintage of business | Salaried: Minimum work experience of 3 years Self-employed: Business should be running with a minimum age of five years old |
| Loan to value ratio of the property | Usually between 60-70% |
| Credit score | 650 and more |
