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A loan against property (LAP) is a secured loan approved by the lender while keeping an asset as a mortgage. This asset can be fully constructed, freehold residential, and commercial properties. This form of secured loan may be an option for unsecured Loan Against Property since there is no limit on end-use. Also, its interest rates are considerably lower as compared to any unsecured loan.

LAP has unique benefits that enable borrowers to meet their high-end expenses with ease. Some of the expected benefits are listed below:

End-Use Flexibility: 

LAP is a multi-purpose loan available for different purposes. This includes spending on a child’s education, managing your wedding expenses, expanding your business, or even handling unforeseen medical expenses.

Long Tenure:

Depending on the loan amount, the loan against property repayment tenure typically ranging between 15 and 20 years (varies from lender to lender). This gives you the benefit of lower EMIs, greater flexibility of repayment, and ensure that your monthly budgets are not under any pressure.

Instant Loan Approval & Disbursal:

After reviewing the credit profile and repayment capability, the lender sanctions the loan amount and communicates the same via an email or SMS. The disbursement process starts after the sanction, and within a few days of the sanction, you get the loan amount credited to your bank account.

Eye-catching Interest Rates:

At attractive interest rates starting from 8.50 percent, loans against property are affordable.

Greater Loan Amounts: 

The loan amount offered by various banks ranging between 10 Lakhs to 5 Cr.

Depending on the type of borrower, the eligibility criteria for a LAP differ. Here are some of the crucial eligibility criteria for LAP that need to be kept in mind:

Age limit: 

The age should be between 18-60 years for salaried and 21-65 years for self-employed.

Earning Amount:

A minimum net monthly income of INR 25,000-40,000 is considered for salaried and self-employed individuals to get their loan sanctioned. 

Employment Tenure:

Salaried individuals need to serve in the organization for at least two year. In contrast, self-employed individuals need to have continuous business tenure of at least three-four years.

Credit Score:

750 or above with a good credit history

Loan-To-Value (LTV):

The LTV ratio varies by property type. For loans made against residential property, the LTV ratio is highest, and for loans against commercial property, the LTV ratio is lowest.

fiber_manual_recordFor residential property: 60 - 75%

fiber_manual_recordFor commercial property: 60 - 70%

fiber_manual_recordFor industrial property: 50 - 55%

Note - The eligibility criteria explained above can vary from one lender to another.

When applying for a LAP, don’t forget to submit the below-mentioned documents required by the lender.

Documents for Salaried

fiber_manual_recordIdentity Proof - PAN Card/ Aadhaar Card/ Voter ID/ Driving License/ Passport 

fiber_manual_recordResidence Proof – Aadhaar Card/ Voter ID/Passport/Driving License/Electricity Bill/Telephone Bill

fiber_manual_recordIncome Proof – the last three months of salary slips, six months bank statement

fiber_manual_recordOffice Identity Card 

fiber_manual_recordForm 16 or Income Tax Returns of the last three years

fiber_manual_recordProperty Documents: Copy of approved plan for construction/ extension, sale deed, conveyance deed, share certificate, allotment letter, possession letter, and latest property tax receipt, list of documents & sanction letter given by existing banker (If applicable)

Documents for Self-employed

fiber_manual_recordCompletely filled Home loan application with photograph

fiber_manual_recordIdentity Proof– PAN Card/ Aadhaar Card/ Voter ID/ Driving License/ Passport

fiber_manual_recordResidence Proof – Aadhaar Card/ Voter ID/Passport/Driving License/Electricity Bill/Telephone Bill

fiber_manual_recordOffice Address Proof – Electricity Bill/Landline Bill/GST or VAT Registration

fiber_manual_recordIncome Proof– Latest bank statement of 1 year.

fiber_manual_recordLast three years Income Tax Returns along with computation of Income

fiber_manual_recordLast three years CA Certified / Audited Balance Sheet and Profit & Loss Account

fiber_manual_recordProperty Documents: Copy of approved plan for construction/ extension, sale deed, conveyance deed, share certificate, allotment letter, possession letter, and latest property tax receipt, list of documents & sanction letter given by existing banker (If applicable)

fiber_manual_recordCompletely filled LAP application with photograph

Interest Rate 8.35% onwards
Loan Tenure Up to 20 years
Processing Fee Differs from bank to bank; generally upto 1% of loan amount
Lock-In Period Varies from lender to lender
Prepayment Charges Nil charges

The loan against property process involves three steps:

Step 1: Submit relevant documents that prove your income, age, address, and identity. After the submission of the documents, the verification process begins by the lender.

Step 2: In the verification process, the lender will check whether you are eligible for the loan or not. If you pass the eligibility criteria set by the lender, then you get loan approval. Otherwise, your application will get rejected.

Step 3: After getting the approval, the loan amount will be disbursed to your bank account.

For a specified time, a loan against property is issued, and this time period is known as the loan repayment tenure. You are supposed to pay off the debt after you have taken out a loan by the end of the tenure of the loan repayment through EMIs. However, if you plan to pay off your loan prior to the expiration of the loan repayment period, it is called pre-payment or foreclosure.

There are two types of repayment. They are full pre-payment and part pre-payment.

Full Pre-Payment: You pay off the entire unpaid loan balance before the expiration of the tenure of the loan repayment.

Part pre-payment: You pay off a part of the entire unpaid loan balance before the end of the loan repayment tenure.

Tie-ups with Banks/Financial Institutions: We have formed alliances with numerous banks and financial institutions.

Unbiased Expert Advice: We take pride in offering unbiased advice to our customers regarding Balance Transfers and other products. Our specialists use their knowledge of the market to inform you which lender is best for your cause.

Hassle-free Process: You don’t have to worry about visiting banks numerous times to check the loan application status. We handle all the process and keep you in the loop to ensure that you get the updated information.

No Hidden Costs: We don’t charge any fees to the borrower.

Attractive Cashbacks: Receive cashback and vouchers when you are applying for a loan through us.

Step 1: Fill the eligibility form

You must complete the eligibility form in the first step, which involves filling in the following details:

fiber_manual_recordFull Name (As per PAN Card)

fiber_manual_recordMobile Number

fiber_manual_recordEmail Address

fiber_manual_recordCurrent Residence Pincode

fiber_manual_recordCurrent Residence City

fiber_manual_recordEmployment Type

fiber_manual_recordMonthly Income

fiber_manual_recordDesired Loan Amount

fiber_manual_recordProperty Type

Step 2: Select from the multiple offer(s)

Based on the information you provided in Step-1, you will be given a list of lenders by our representative.Pick the lender that you wish to go ahead with from the list. But, please remember to consider the following points when picking the lender:

fiber_manual_recordInterest rate offered

fiber_manual_recordLoan amount

fiber_manual_recordLoan Tenure

fiber_manual_recordEMI

Step 3: Apply for the loan

In this step, you have to give detailed information about your personal details and bank details.Once you submit your loan application, our representative will contact you to cross verify the details before sending the application to the selected lender.

Let’s see an example of a LAP to understand better:

You get a 5-year loan tenure of INR 20 lakh at an interest rate of 12% per annum.

As per these details, you will most likely pay a monthly EMI of INR 44,489. The interest obligations will amount to INR 6,69,330 over the next 5 years.

The total amount payable will be INR 26,69,330.

The below comparison table contains popular LAP along with their processing fees, and interest rate:

Bank Loan Against Property Rate Processing Fee
SBI Loan Against Property Rates 8.80% 1.00%,Max ₹ 50,000
HDFC Loan Against Property Rates 8.35% 0.25%
ICICI Bank Loan Against Property Rates 8.90% 2.00%, Min ₹ 5,000 - Max ₹ 10,000
Axis Bank Loan Against Property Rates 10.50% 1.00% Min ₹ 10,000 - Max ₹ 10,000
Citibank Loan Against Property Rates 7.50%
Indiabulls 10.50% 1.00% Min ₹ 5,000
PNB Housing Finance 9.80% 1.00%
Standard Chartered Bank 10.10% 1.00%, Min ₹ 10,000
DBS Bank 11.90% 0.50%, Max ₹ 10,000
Indian Bank 12.25% 1.17%
Federal Bank 11.90% 0.50% Min ₹ 3,000 - Max ₹ 7,500
Central Bank of India 11.10% 0.50% Max ₹ 20,000
Cholamandalam 11.50% 1.00%
Andhra Bank 10.75%
Bajaj Finserv 9.75% 1.50%
PNB 10.20% 0.90% Max ₹ 45,000
Indian Overseas Bank 10.85% 0.62% Min ₹ 890 - Max ₹ 8,900
United Bank of India 10.75% 1.00%
Syndicate Bank 11.50% 0.50% Min ₹ 500
Punjab and Sind Bank 11.30% 1.00% Min ₹ 2,000 - Max ₹ 50,000
Kotak Bank 9.60% 1.00%
Jammu And Kashmir Bank 12.20% 0.20%
IDBI Bank 10.20% 1.00%
Edelweiss 12.00% 1.00%
Corporation Bank 11.35% 1.00%
Canara Bank 11.70% 1.00% Min ₹ 5,000 - Max ₹ 50,000
Piramal Housing Finance 10.10% 0.50%
Allahabad Bank 14.15% 0.53% Min ₹ 2,670 - Max ₹ 80,100
Yes Bank 10.50% 1.00%
HDFC Bank 8.75% 0.50%
DCB Bank 12.72% 1.00%
Union Bank of India 11.50% 0.50%
OBC 10.95% 0.50%
KarurVysya Bank 12.15% 0.50%
IndusInd Bank 9.50% 2.00%
HSBC Bank 9.80% 1.00% Min ₹ 10,000
DhanLaxmi Bank 11.55% 1.50% Min ₹ 10,000
LIC Housing Finance 11.30% 0.25% Max ₹ 25,000
Bank of India 10.65% 1.00% Min ₹ 5,000 - Max ₹ 50,000
IDFC First Bank 11.80% 1.00% Min ₹ 5,000
RBL Bank 13.05% 1.25% Min ₹ 7,500
UCO Bank 9.20% 1.00%
South Indian Bank 10.70% 0.50%
Lakshmi Vilas Bank 11.65% 1.20%
Karnataka Bank 10.90%

1.

Is it mandatory to have a co-applicant for availing LAP?

A co-applicant for a property loan is mandatory only if more than one person owns the mortgaged property. All co-owners of the property need to register as co-applicants in such a situation.

2.

How is the value of a property calculated?

A property's market value is calculated in terms of the money it will earn if it is sold under prevailing conditions.

3.

Can there be a co-applicant for loan against property? If yes, who can be co-applicant?

As a co-applicant, you can include your spouse and that results in lending a higher amount. However, if the property is co-owned, it is required that all co-owners need to be co-applicants.

4.

How to repay my loan?

You repay the loan in principal and interest-based Equated Monthly Installments (EMIs). Repayment through EMI begins in the following month, in which you take full disbursement.

5.

Can I repay the loan ahead of schedule?

Of course! Prepayment is possible and if you repay the loan within six months of using the loan. There is no prepayment charge if you pay from your own source of funds without moving the loan.

6.

Can I get a loan against property with any existing loans?

Lenders typically inquire about the status of your existing loans when you apply for a loan against property. This is done in order to determine the potential to pay out EMIs on your loan in the future. If your payment history is strong, then you might be given the option by the lenders to take up the loan on your existing property loan. Lenders can also give you a new LAP if it thinks that your current income levels can cover additional EMI repayments, and you may thus apply for a new LAP loan.

7.

What are the documents required for LAP?

Please refer to ‘Documents Required forLoan Against Property’ section mentioned above.

8.

How is my eligibility for a loan against property calculated?

Please refer to ‘Loan Against Property Eligibility Criteria’ section mentioned above.

9.

What criteria does my property need to fulfil for me to avail a LAP?

You need to make sure that the land title is valid, free of any lawsuits, and that a current mortgage or loan should not be present.

10.

What is an amortization schedule?

An amortization schedule is a table that decreases the monthly installments of your loan number. This schedule gives the break-up of each EMI against interest repayment and your loan's unpaid principal.