Loan Against Property – LAP or Mortgage Loan

Loan against Property (LAP), also known as mortgage loan, allows consumers to raise funds by leveraging their residential, commercial or industrial properties. Like unsecured personal loan, LAP can also be availed for meeting both personal and business needs other than speculative purposes. Banks and HFCs offer loan against property for tenures of up to 20 years. The loan amount for LAP can go up to 75% of the property’s market value, depending on the lender and the credit profile of the borrowers. Many lenders also offer Lease Rental Discounting (LRD) facility, which allows consumers to avail loan by pledging the rental receipts of their tenants.

Features & Benefits of Loan Against Property

  • Lower interest rates – The secured nature of the loan reduces lending risk of banks and NBFCs considerably, thereby, allowing them to offer the loan at lower interest rates.
  • No end use restrictions – Loan proceeds can be used for any purpose such as for consolidating multiple high-interest debts, covering costs related to wedding, business expansion, etc.
  • Longer loan tenure – Banks and NBFCs offer tenures of up to 20 years on loan against property, resulting in more affordable EMIs.
  • Higher loan amount – Lenders usually finance up to 70% of the property value, resulting in higher loan amounts.
  • Higher chances of loan approval – The loan is backed by any underlying property, thus, reducing lending risk for banks/NBFCs and increasing borrowers’ odds of availing the loan.
  • Overdraft facility – Borrowers can also avail overdraft facility on this loan, giving them higher liquidity at lower interest cost.