What is Loan Against Property (LAP)?
A loan against property (LAP) is exactly what the name implies -a loan granted or disbursed against the mortgage of property. The loan is given as a certain percentage of the property’s market value, usually at around 40 per cent to 60 per cent.
Loan against property was essentially a domain of foreign and private banks. They offered the product to fund their self-employed customers’ business-related needs. Lately, all banks are offering this product including the public sector banks.
capital requirements or fulfill any other personal or professional needs. Usually, loans are granted up to 60%-70% of the
Before taking the loan, the borrower needs to sign a declaration stating the end-use of fund.
Loan Against Property Eligibility Check – Who can opt for Loans Against Property?
Individuals (Salaried or self-employed) who have a property and who can fulfill the following requirements
- Age (Min. 21 Years and Max. 50 to 70 years- depends on the lender)
- Property Valuation
- Existing Liabilities (if any)
- Current Work Experience
- Financial Documents
- Number of Dependents
What is the process for Loan Against Property?
The process for loan against property is pretty much similar to the home loan process.
- Sanctioning of the Loan
What are the documents required for loans against property?
Application form with photograph
2. Photo Identity and Address Proof
3. Latest Salary Slips
4. Form 16
5. Bank Statements (Last 6 months)
6. Processing fee cheque
- Application form with photograph
2. Photo Identity and Address Proof
3. Proof of business existence & Education Qualifications.
4. Last 3 years ITR
5. Last 3 years P&L and Balance Sheet
6. Bank Statements (Last 6 months)
7. Processing fee cheque
Loan against property interest rate calculator
Loan against property interest rate calculator helps you get the approximation of the loan amount you are eligible for and the interest rate at which you can borrow the loan against your commercial or personal property. The rate of interest for the loan is based on the customer’s profile, which covers company name, salary, credit history, etc. Loanyantra helps you calculate the exact tenure and loan amount, emi amount. Just sign in and fill, and get the right product information from Loanyantra.com
When can you go for loan against property option ?
- To meet the credit needs of trade, commercial activity, other general business/profession, as also for their bona fide requirements.
- To meet educational expenses of family members including near relatives
- To undertake repairs/renovation/extension to the residential/commercial property.
- To purchase / construct residential house/flat, purchase of plot of land for construction of house/ premises for business/commercial use.
- For Repayment of existing loans availed from other Banks / FI’s conforming to the extant guidelines regarding “takeover” of account.
What you should know about tax benefits for Loan against property, LAP?
- There are no tax incentives while paying the EMIs, unlike in the case of home loans. However, this is only in the case of a salaried person.
- A businessman can claim tax deduction on the entire interest amount paid on the loan if he can prove that the loan was genuinely used to improve his business. This tax advantage is also available if the businessman takes a loan against gold or shares/securities that he owns. The interest rate for a loan against shares or securities, such as the PPF and NSC, varies from 12-15%, while that for gold ranges between 14% and 25%. In the case of the former, a lender will be willing to offer a loan that is 40-60% of the value of the securities, while for a gold loan, you will be able to get 50-70% of the value of the gold you pledge.
- If you are already under a home loan and need money for children’s education or marriage, top-up loan is the best option though the interest rate is a little high. But if you are not under a home loan and have an own house, then Lap is the best when compared to personal loan. Because, the interest is lesser (similar to home loan), longer tenure, less or no processing fees.
- If you default, the bank will sell the pledged shares or gold to recover its dues, which is a smaller loss than losing your home. However, if you need a large amount of money that runs into lakhs, the only viable valuable asset that you may be able to pledge is your house.
Different Banks Interest Rates for Loan Against Property: (As on 4th September 2015)
Loan Against Property is a secured loan which means it is offered only when you keep freehold residential property with the bank as security. Personal loan interest rate is allocated according to the customer’s salary, the amount being borrowed, and other criteria
|Banks||up to 30 lacs||30-75 lacs||75 & above||Processing fees|
|HDFC||12.75%||12.75%||12.75%||1%+ service Tax|
|Ing vysya||12% to 13%||12% to 13%||12% to 13%||1%|
|ICICI Bank||12.05%||12.05%||12.05%||1% + service tax|
|SBI||12.60%||12.60%||12.60% (Upto 1 Cr) else 12.85%||1%|
|PNB HFL||12.25% – 13.00%||12.25% – 13.00%||12.25% – 13.00%||1%|
|FedBank||13%||13%||13%||1% + service tax|
|India Bulls||12.50%||12.50%||12.50%||1%+service Tax|
|DCB||13.50%||13.50%||13.50%||1% + service Tax or Min 5000/-|
|Standard Chartered||11.75%||11.75%||11.75%||1%+ service tax|
|Citibank||11.5% (Fixed for 2yrs)||11.5% (Fixed for 2yrs)||11.5% (Fixed for 2yrs)||0.50%|
|IDBI Bank||11.50%||11.50%||11.50%||10000 + service tax|
|Deutsche Bank||11.75% to 13%||11.75% to 13%||11.75% to 13%||1% + service tax|
|Cent Bank||14.25||N.A||N.A||1% of the loan amount|
|HSBC||11.20% – 11.70%||11.20% – 11.70%||11.20% – 11.70%||0.50%|
|DHFL||13.75%||13.75%||13.75%||1.5% + Taxes.|
|LIC HFL||12.50%||12.50%||12.50%||0.50% + service tax|
|Fullerton||15.5%||15.5%||15.5%||1% of the loan amount|
|Edelweiss||13.25%||13.25%||13.25%||1% of the loan amount|
|Bank of India||11.70%||11.70%||11.70%||1% of the loan amount Max. Rs.50000|
|Tata capital||12.50% – 13%||12.50% – 13%||12.50% – 13% (Upto 1Cr)
then 13% – 13.50%
|1% + service tax|
|Magma housing finance||14% – 14.50%||14.50 %||14.50 %||1.25% + service tax|
|Kotak||12.5% to 13%||12.5% to 13%||12.5% to 13%||1%|
Disclaimer : This site does not take any responsibility for any sudden / uninformed changes in interest rates.