Loan Against Property (LAP) is a type of loan that can offer a lump sum amount at a lower interest rate than traditional personal loans. As the name suggests, this loan is secured against a property owned by the borrower, which can be a residential or commercial property. The property serves as collateral to secure the loan, and the lender may auction or sell it if the borrower fails to repay the loan amount.
Understanding LAP full form, LAP stands for Loan Against Property, which is a type of secured loan that uses a property as collateral for borrowing funds. You can use your residential or commercial property to secure the loan and get a lower interest rate in comparison to unsecured loans.
Eligibility Criteria for LAP
To be eligible for LAP, you will have to fulfil various criteria set by the lender. The eligibility criteria vary depending on the lender and the loan amount. Here are some general eligibility requirements that you should consider:
– Age:
The borrower must be at least 21 years old and below the age of 65.
– Property Ownership:
Only the owner of the property can apply for LAP. It can be a commercial or residential property.
– Income:
The borrower must have enough income to repay the loan. The lender considers the borrower’s income sources/expenses to calculate their net monthly income.
– Credit Score:
A good credit score is essential if you want to qualify for LAP. The credit score helps the lender in determining the borrower’s repayment capacity.
– Property Condition:
The property that the borrower intends to use as collateral should be in good condition.
Documents Required for LAP
To apply for LAP, you will need to submit various documents, such as:
– Application form
– Identity proof (PAN Card, Aadhar Card, Voter ID, Passport, etc.)
– Address proof (Electricity bill, telephone bill, Aadhar card, Passport, etc.)
– Property documents (Property papers, sale deed, title deed, etc.)
– Income proof (Salary slips, Income tax returns, Bank statements, etc.)
– Latest two passport size photographs
Loan Against Property Interest Rate
The loan against property or lap interest rates varies depending on the lender, loan amount, and the borrower’s credit score. Typically, the LAP interest rates range from 8% to 15%. However, the interest rates may vary if you approach different lenders, and it’s advisable to compare the interest rates before finalizing the lender.
Loan Against Property EMI Calculator
Before applying for LAP, it’s essential to calculate the EMI amount that you will have to pay to the lender. The EMI amount depends on the loan amount, interest rate, and loan tenure. You can use the LAP EMI calculator to calculate the EMI and plan your monthly budget accordingly.
LAP Eligibility Calculator
LAP Eligibility Calculator is a tool that helps you determine the maximum loan amount you can get based on your income, property value, and other factors. This tool uses specific algorithms to calculate the eligibility of the borrower for LAP, and you can use it to determine your eligibility for LAP.
Benefits of Loan Against Property
LAP offers numerous benefits to the borrowers, which makes it a popular choice for those who need a lump sum amount for various purposes. Here are some of the benefits of LAP:
– Lower Interest Rates:
LAP offers a lower interest rate than typical personal loans. As the loan is secured against a property, lenders consider it as a low-risk loan and offer it with lower interest rates.
– Higher Loan Amount:
You can get a higher loan amount with LAP as compared to personal loans. The loan amount is based on the property’s value, and you can get up to 60% of your property value as a loan.
– Longer Tenure:
The loan tenure for LAP is longer than personal loans, which can be up to 20 years depending on the lender.
– No End-use Restrictions:
You can use the loan amount for any purpose, such as business expansion, education, home renovation, debt consolidation, or any other personal or professional needs. The loan against property doesn’t come with any end-use restrictions.
– Tax Benefits:
The interest paid on LAP is tax-deductible under section 37(1) of the Income Tax Act for professionals and eligible businesses.
Conclusion
Loan against property is an excellent option for those who have a property and need a lump sum amount for their personal or professional needs. You can secure your loan against your residential or commercial property and enjoy lower interest rates, longer tenures, and higher loan amounts. However, you should be cautious while applying for LAP and choose a lender wisely. It’s always advisable to compare the interest rates, loan amount, and other terms before finalizing the lender.
