Loan against Property (LAP) is more generally known as ‘Home Equity Loan’. LAP is a secured loan. If you own residential or commercial property you could utilize the value of the same by opting for an equitable mortgage loan.
LAP is opted for when the amount required is considerably more and cannot be raised by the means of unsecured loans and the repayment period is comparatively longer. In spite of the fact that the interest rate is higher than a conventional home loan, it’s typically cheaper than a loan against security or a personal loan.
What is the difference between a Home Loan and LAP?
Home loan is taken only for the reason of buying a housing property while a LAP can be taken for any reason. This loan can be availed against Residential, Commercial or Industrial properties.
What factors are considered for eligibility?
The universal factors taken into account to check the eligibility for LAP are: Income, Age(minimum 21 years), Property assessment, accessible liabilities(if any), Current work experience, monetary Documents, Number of dependants.
How much amount can I take in LAP?
The bank provides around 70-80% value of your registered property. The bank takes into consideration other factors such as property type and value.
Can I avail an Overdraft against my Property?
A LAP can be availed as a Term Loan with EMI repayments or as a Drop line Overdraft Facility.
Does the property have to be insured?
Yes, the property has to be insured against flames, flood, earthquakes and other suitable hazards through the tenor of the loan.
What are the interest rates?
Interest rates on LAP range from 12 per cent to 16 per cent.
What happens if the loan is not repaid?
The Property can be repossessed by the lender to recover its outstanding loan amount. To allow recovery of the loan amount, courts can order foreclosure (sale in the open market to recover dues) of the property.