As the name suggests loan against property (LAP), is the loan that you avail by keeping your property as mortgage with the bank. The loan is given as a certain percentage of the market value of the property.
Once you lend your property as a mortgage, the bank or the NBFC will provide you 60-70% of the current market value of that property as loan. As your property is kept as collateral with the bank, it is a secured loan. In case you fail to repay the loan, the lender has the right to auction your property and recover the money.
Interest rate:
The main part of the loan is collateral. Now collateral is a form of assurance to the bank that loan will be repaid after the given tenure. LAP interest rates generally ranges between 12% and 15% while in case of personal loan the interest rate ranges is 15% to 25% Lower to no prepayment charges. You can close your loan against property by making prepayments towards your loan. Lenders generally don’t charge prepayment charges in case of loan against property. While it is not true for all the banks, you can expect the prepayment charges to be lower.
Eligibility Criteria:
- Firstly, the property you are planning to put forward as collateral should have no outstanding disputes associated with it.
- You should be of Indian nationality.
- You should at least 21 years of age to fill the loan application (This age factor may vary from bank to bank).
- If you are a salaried employee, you have to have the salary of 25000 per month to get access to LAP.
- If you are a self employed individual, your annual income should be INR 5,00,000.
- The lender will be getting a background check on you. Therefore, make sure that your credit score for the loan is good with other banking institutions
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