LAP (Loan Against Property) is a secured loan where you pledge a property you own as collateral to borrow money. You continue to own and use the property while repaying the loan. If you fail to repay according to the loan agreement, the lender may take legal action to recover the outstanding amount, which can ultimately include enforcing its security interest in the property.
Who can get a Loan Against Property?
Typically, the following can apply (subject to each lender’s eligibility criteria):
- Salaried employees
- Self-employed professionals (doctors, CAs, architects, etc.)
- Business owners
- Partnership firms
- Private limited companies
- LLPs
- Trusts (with lender-specific conditions)
What types of properties are accepted?
Most lenders accept:
- Residential houses or apartments
- Commercial offices or shops
- Industrial properties (some lenders)
- Certain plots or land (many lenders do not accept vacant land, or do so only under specific conditions)
The property generally needs to have clear legal ownership and marketable title.
Eligibility factors
Lenders usually consider:
- Ownership of the property
- Property’s market value
- Applicant’s income and repayment capacity
- Credit history (such as CIBIL score)
- Existing loans on the property
- Applicant’s age and employment/business stability
How much loan can you get?
The amount depends on:
- The property’s value
- Your income
- Your repayment capacity
- The lender’s policies
Many lenders finance around 50% to 75% of the property’s market value, though the exact percentage varies.
Example:
- Property market value: ₹80 lakh
- If the lender offers up to 70% Loan-to-Value (LTV), the maximum eligible loan could be approximately ₹56 lakh, subject to income eligibility and other checks.
Common uses of LAP
People often use LAP for:
- Business expansion
- Working capital
- Purchasing business equipment
- Education expenses
- Medical emergencies
- Home renovation
- Debt consolidation (where permitted by the lender)
Some lenders may restrict or prohibit using LAP funds for certain purposes, such as speculative investments.
Documents generally required
For individuals:
- PAN card
- Aadhaar or other address proof
- Identity proof
- Income proof (salary slips or ITRs)
- Bank statements
- Property ownership documents
- Passport-size photographs
Businesses may need additional documents such as GST registration, business financial statements, partnership deeds, or incorporation documents.
How to apply
- Choose a bank or NBFC that offers LAP.
- Submit the application and required documents.
- The lender verifies your income and credit profile.
- The property undergoes legal and technical verification.
- The property is valued by the lender.
- If approved, you receive a sanction letter.
- After executing the loan agreement and creating the mortgage, the loan amount is disbursed.
Interest rates and tenure
Interest rates vary by lender and market conditions. Loan tenures can often extend up to 15–20 years, depending on the lender, the applicant’s profile, and the type of property.