Concept of Loan Against Property (LAP) and Its Deeper Understanding | LAP – Loan Against Property

A loan that is secured against property (LAP) is a kind of loan facility that people and corporations can use in exchange for a mortgage on an industrial or dwelling. The property is pledged as collateral for the loan amount in a secured loan. 

  • A borrower may receive up to 70% of the value of the property once the lender’s needed paperwork is finished.  A borrower may choose to repay the loan over a longer timeframe depending on the lender’s policies.
  • You must be completely informed about the variables affecting the interest rates, procedures, and lending schemes, as well as the benefits and drawbacks, before attempting to use this loan programme.

Loan – Against Property: What Is It?

  • Weddings, higher education, business development, home renovations, medical expenses, etc. are just a few examples of the many things that salaried and self-employed people can use a Mortgage over Property (LAP) secured loan for. 
  • Depending on a variety of variables, including the candidate’s present debts, disposable income, credit rating, etc., institutions alongside other financiers may offer a loan secured by property. Because the term is up to twenty years, the multipurpose loan has affordable EMIs and guarantees a stress-free repayment period.
  • When making a bid for a loan backed by property, you must exercise caution. Before submitting one, bear the following in mind.

In so far a borrower is the legal owner; a loan against property may be obtained against either a self-occupied home or a house that has previously been rented out.

  • A house, a piece of property or a commercial building all count as real estate that is eligible for an LAP. Additionally, if there are multiple legal owners of a property, they must all apply collectively for a mortgage against the collectively owned property.
  • When an LAP application is received, the lending institution assigns an appraiser to determine the market value of the property or house.
  • Only a predetermined portion of the property’s total market value, typically between forty and sixty percent is normally approved by banks and non-banking financial institutions.
  • Financiers also consider the age and general condition of the property before giving a final sum. It is advised to confirm that the real estate is without any prior liens and is completely owned to the applicant(s) in order to make sure if the loan is authorized.

LAP Eligibility Standards

  • The borrower’s income, debts, savings, history of payments, and the current value of the asset being mortgaged are some common characteristics that all banks take into account, although they may differ from one bank to the next.
  • Other factors that are important in selecting the financing amount ultimately is approved include the borrower’s age, financial situation, work status, and credit score.
  • The oldest person eligible for LAP maturity is set at sixty years old for salaried individuals (Indian retirement eligibility) and 70 years for those who are self-employed because lenders prefer if the borrower repays the debt while remaining employed.
Salaried Person
Filled Application Form with all the formalities
ID Proof : Adhhar, Pass Port
Form 16
Present Address (Resident)
Processing Fees Amount
Bank Statement (6 months from Bank Itself)
Self-Employed
Filled Application Form with all the formalities
ID Proof : Aadhar Card, Passport
For Entrepreneurs: a business profile, Last three years, IT returned to both the individual and the company, financial statements and balance sheets over the last three years.
Professionals: Most recent three years of their personal and business IT returns, accounting records, and statements of earnings and expenses.
Present Address (Resident)
Processing Fees Amount
Personal and Business bank Statements

(Bonus Point:  When a loan against property, also known as is disbursed, the borrower does not receive any tax benefits and is immediately liable for curiosity payment. The processing period for a loan against properties is nearly as long as it is for a home loan because the lender must perform number additional checks.)

Bottom Line

  • Financial difficulties are like unexpected guests; they always show up at the incorrect time and spoil everything that you planned.
  • Many of us generate fictitious funds or alternatives that we are confident will assist us in the event of such an incident by visualizing this situation in our minds. There’s a chance that many of us won’t have that money available, so we’ll have to resort to less desirable options like borrowing money from family or friends.
  • At that time LAP is an essential means of acquiring money. While the high interest rates on personal loans are well known, there are still times when we are left with no other options. A loan on property (LAP) becomes a practical choice in such a scenario.
  • LAP, frequently referred to as a mortgage loan, is a type of secured loan that is disbursed using the security or guarantee of the borrower’s legally owned land. Even while loans secured by real estate have less competitive interest rates than housing loans, they are still more affordable than individual loans.

(Note: We thank all the mentioned sources for valuable research materials. It is our sincere wish that you find value in this article. These articles are intended solely for informational purposes; if further clarification is required, please consult appropriate professionals. Nothing on this site is for sale or promotion.)