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Loan Against Property

A loan against property (LAP) is a secured loan in which an individual or business pledges a property as collateral to borrow funds from a lender. The property can be residential, commercial, or industrial and remains with the borrower, but it acts as security for the loan. Unlike a home loan, a home loan against property can be used for various purposes, not just for buying, renovating, or extending a home.

Features and Benefits of Loan Against Property

A loan against property provides the benefit of borrowing larger loan amounts by using property as collateral. Besides, several other advantages make a LAP a cost-effective borrowing option for borrowers.

Listed below are the key benefits of loan against property:

1. Higher Chances of Loan Approval:Since the loan is secured by property, lenders are more likely to approve the application

2. Lower Interest Rates:Being a secured loan, the interest rates are generally lower compared to unsecured loans

3. Higher Loan Amount:Borrowers can avail larger loan amounts, typically up to 60-75% of the property's market value

4. Longer Repayment Tenure:Loans can be repaid over a longer period, usually ranging from 10 to 20 years

5. No End-Use Restrictions:The loan can be used flexibly for various purposes, including business, personal expenses, or education

Eligibility for Loan Against Property

A loan against property meaning will be incomplete without knowing about its eligibility. Different banks and NBFCs have their own criteria to evaluate and approve a LAP scheme, but you can get an idea by understanding the common loan against property eligibility criteria they usually follow that are listed below:

Age	Nationality	CIBIL Score	Employment Status	Work Experience	Income	Property Type
18 to 70 years	An Indian citizen with collateral property in India	750 or more	Salaried, self-employed professional, or self-employed non-professional	Minimum 1 year in the current organization (If salaried)	Must have a stable income	Residential, commercial, or industrial property that can be pledged as collateral

Loan Against Property Fees and Other Charges

When taking a loan against property, borrowers should be aware of various fees and charges. These typically include a processing fee, which is a percentage of the loan amount, along with legal and valuation fees for property assessment and documentation. Additionally, some lenders may impose foreclosure or prepayment charges if the loan is repaid early, though these vary depending on the loan terms.

The table below will acquaint you with a general range of a loan against property processing fees and other charges:

Processing Fee	Generally, up to 2% of the loan amount + GST
Legal/ Valuation Charges	Generally a small fee for legal verification and property valuation
Penal Interest	General 2% per month on the overdue installments
Foreclosure/ Prepayment Charges	Generally, nil for floater plans; up to 2% of the outstanding loan amount for fixed plans

Loan Against Property Interest Rates of All Banks and NBFCs

Interest rates for LAP vary across banks and housing finance companies, typically ranging from 9% to 15% per annum. It is essential for borrowers to compare these rates to find the most favorable terms that suit their financial needs.

Have a look at the loan against property lowest interest rates of leading banks and NBFCs in India for an informed decision regarding the same:

Bank/ NBFC	LAP Interest Rate (Fixed & Floating)
IDFC Bank	9.00% - 20% p.a.
Tata Capital	9.00% - 14.25% p.a.
PNB Housing Finance	9.25% - 15% p.a.
HDFC Bank	9.50% - 11.00% p.a.
LIC HFL	9.50% - 11.55% p.a.
IDBI Bank	9.50% - 11.70% p.a.
Kotak Mahindra Bank	9.50% p.a. onwards
Bajaj Housing Finance	9.75% - 18.00% p.a.
SBI	10.00% - 11.30% p.a.
Cholamandalam Housing Finance	10.00% - 24.00% p.a.
Indian Bank	10.00% - 12.75% p.a.
Bajaj Finserv Housing Finance	10.10% - 18.00% p.a.
Axis Bank	10.40% - 12.75% p.a.
Bank of Baroda	10.85% - 18.60% p.a.
ICICI Bank	10.85% - 12.50% p.a.
Bank of Maharashtra	10.95% – 11.45% p.a.
Bank of India	11.35% - 12.85% p.a.
Piramal Housing Finance	11.50% p.a. onwards
IIFL Housing Finance	11.50% p.a. onwards
Shriram Housing Finance	12.50% - 14.00% p.a.
Bandhan Bank	12.64%-17.22% p.a.

Loan Against Property Process - Step-by-step Guide

The loan against property processis simple and can be done online from anywhere by following these steps:

Step 1:Visit the BASIC Home Loan official website and click on ‘Apply Now’

Step 2: Choose ‘Loan Against Property’ under ‘Tell us about your requirements’

Step 3: Fill out the online form and submit

Step 4: The BASIC Home Loan team will reach out to you for further assistance.

Documents Required for Loan Against Property

Lenders, be it banks or NBFCs, require KYC documents like identity, income, and address proof to verify the borrower’s authenticity, ability to repay the loan, and residential details. KYC compliance also helps lenders follow legal regulations and reduce the risk of loan defaults. Have a look at the loan against property documents required list given below:

1. Identity Proof: Aadhaar Card, PAN Card, Voter ID Card, etc.

2. Address Proof: Voter ID Card, Electricity Bill, Telephone Bill, Passport, etc.

3. Age Proof: Passport, PAN Card, 10th Class CBSE Certificate, etc.

4. Income Proof for Salaried: Recent ITR, Form 16, Salary Slips, Bank Account Statements, etc.

5. Income Proof for Self-Employed: Recent ITR, Profit and Loss Account Statements and Balance Sheet of the Firm, Bank Account Statements, Business License Details, etc.

6. Property Proof: Title Deeds, No Objection Certificate, Property Tax Receipts, Deel of Sale, Approved Plan, Encumbrance Certificate, etc.