Loan Against Property (LAP)

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Laon against property

Overview

A Loan Against Property (LAP) is a secured loan that is taken out against real estate, either residential or commercial, that is held as security by the lender. Borrowers are free to use the funds anyway they see fit, including for business growth, weddings, children's education, and other things.

Benefits of LAP

• Easy approval procedure

• Favourable interest rates

• Perpetual ownership

• Simple and uncomplicated documentation

• Making the most of a property

• Interest claims as expenses (only for business people)

Eligibility criteria for LAP

A loan secured by property is made available to the following people:

a) Salaried: A person who works permanently for the government or a reputable organisation. Additionally, he or she must be at least 24 years old and not yet in retirement at the time the loan is started.

b) Self-employed Businessmen: Anyone who is above 24 at the time the loan is started and up to 65 at the time the loan matures and who files an Income Tax Return (ITR).

c) Professionals: who are self-employed are eligible to apply, including those in the fields of medicine, engineering, dentistry, architecture, chartered accounting, cost accounting, business secretarial services, and management consulting. The age requirement is comparable to that for independent contractors.

Documents required for LAP

Salaried Individuals	Self-Employed Professionals/Businessmen
Application with a picture attached	Application with a picture attached
Valid photo identification, such as a driver's licence, passport, Aadhaar card, or voter identification card	Valid photo identification, such as a driver's licence, passport, Aadhaar card, or voter identification card
Evidence of current residency	Evidence of current residency
Newest pay stubs, minimum three	Business licences, diplomas, and other documents attesting to your qualifications
Form 16	For Professionals – Last 3 years IT returns (self and business), Last 3 years Balance Sheets and P&L statements For Businessmen – The business profile, Last 3 years IT returns (self and business), Last 3 years Balance Sheets and P&L statements. List of Directors and Shareholders with their individual shareholding certified by a CA / CS in case of the business entity being a company. Memorandum and Articles of Association of the Company. A partnership deed in the case of the business entity is a partnership firm.
Bank statements of the last six months	Bank statements of the last six months – both business and personal in case of businessmen
A cheque for processing fee	A cheque for processing fee

FAQs:

What are the types of properties against which LAP can be taken?

• Self-Owned and Self-Occupied Residential Property

• Self-Owned but Rented Residential Property

• Self-Owned Piece of Land

• Self-Owned Commercial Property

• Self-Owned but Rented Commercial Property

What is the maximum loan amount a person can get in LAP?

A person may obtain up to Rs 25 crore in loans secured by LAP. However, the LAP usually doesn’t go over 60% of the property's market value. From bank to bank, a different maximum loan amount may be offered.

What is the minimum credit score required to get a LAP?

The minimum credit score required to get LAP is a CIBIL score of 750 and more.

What can be the maximum repayment tenure and interest rate of the LAP?

LAP payback terms might last up to 20 years. While the interest rate varies from bank to bank, it generally ranges from 9.80% per year to 16.60 per year.

We hope the above blog was helpful in enhancing your knowledge on the matter. In case of any queries feel free to get in touch with our team of experts.

Quote of the day:

“Timely return of loan makes it easier to borrow a second time .”

~Chinese proverb

Regards

Sangita Sahu

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umang@caumang.com

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