The ABC’s Of Taking Up A Loan Against Property


The ABC’s of taking up a loan against property

You may have a lot on your mind when it comes to sending your children for education abroad or maybe finance your business or even finance your child’s wedding. The first thing that would come into the mind of most of us is, ‘Where would I get the money from?’

There are many ways you could arrange for money, and one of those ways is taking a loan. You could take a personal loan for the amount required, or you could take a loan against your property.

What is a loan against property?

A loan against property (LAP) is exactly what the name implies — a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property’s market value, usually around 40 per cent to 60 per cent.

Loan against property belongs to the secured loan category where the borrower gives a guarantee by using his property as security.

What purposes can I take a loan against property for?

Loan against Property can be taken for following purposes:
• Expanding your business
• Getting your son/daughter married
• Sending your son/daughter for higher studies abroad
• Funding your dream vacation
• Funding medical treatments

What kind of properties can I mortgage for a loan?

You can normally take a loan against your self-occupied or rented residential property. This could be a house or even a piece of land.

What are the eligibility criteria to get a loan against property?

This criteria will vary from one bank to another. However, from all the host of factors, the common factors that all banks look at are:

• Your income, savings, debt obligations
• Cost/value of the property mortgaged
• Your repayment track record for other loans, credit cards, etc.
• What are the normal interest rates and tenure for repayment offered for a loan against property?

Interest rates on loan against property range from 12 per cent to 15.75 per cent, and the loan tenure can be up to 15 years.


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