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Have A Look On Loan Against Property Features & Advantages!

The LAP, or Loan Against Property, is one of the oldest and most secure types of loan available in the market. Lenders quickly provide loan against the property after security verification. This article will help you understand the features and advantages of LAP.

What Is A Loan Against Property (Lap)?

A Loan against property (LAP) or mortgage loan is a secured loan given by credit institutions against any of the residential or commercial property possessed by the borrower or having any ownership of that particular property. A particular percentage of the market value of the property is given as a loan, as per the requirements. Generally, you can avail up to 60% of your property value as loan as per current market research. 

The credit institution keeps your property as collateral (pledge as security); thus, we can say that loan against property, is a secured loan. So, in case you are unable to repay, the credit institution or the lender reserves the right to auction your property to recover the amount. Hence before taking it must be sure that you are ready to repay the loan amount. 

Types of Property Against which Borrower can Availed for Loan:

  • commercial property.
  • Residential property.
  • Plot area.
  • House.

For Which Purpose You Can Avail Lap?

A loan against property can be availed for any of the personal reasons. Some of the most common reasons for which you can avail property loan are listed as follows:

  • Wedding purposes    
  • Business Expansion    
  • Higher education    
  • Funding a trip or vacation    
  • Medical emergency
  • Consolidate your Debts.
  • Purchasing new property
  • Balance transfer of LAP.

What are the benefits of a LAP?

  • Low-interest  rate: The rate of interest of property loan is lower as compared to a personal loan due to the presence of collateral. Generally, you can avail a loan against property in interest range of 12% to 15%*. While, in case of a personal loan, you would have to pay 15% TO 25% interest. Hence, it is claerf that mortgage loan is better than personal loan.
  • Long  tenure: Tenure duration of loan against property can go up to 15 years while a personal loan has a tenure of fewer than 7 years. So, you can pay the amount more conveniently.
  • Lower EMI: Tenure  and EMI have an inverse relation. Since longer tenure is available, you will be able to pay less monthly EMI. You can use loan against property EMI calculator to get an estimate of your monthly EMI. However, it is advisable to take a loan for shorter tenure if possible as it will have a low overall burden on you.
  • Easy  to avail: credit institutions are often willing to pay secured loans as it minimizes the chances of defaults. So, availing a loan against property is usually not difficult.
  • Low or no prepayment charges: It is good to know that many lenders do not take prepayment charges in case of loan against property. So, you can save a lot if you get the right amount of in-hand cash later.

How does the lender decide the loan amount?

Many factors like age, income, spouse’s income, the value of the property, rented place, condition of property, documentation and others are taken into consideration while determining the loan amount. Generally, lenders provide a loan amount of around 60% of the property value.

What type of properties can be mortgaged?

You can mortgage a piece of land or a self-occupied house. But, the property needs to be free from any mortgage or litigation. You can check your loan against property eligibility online.

Documents Required for Availing Loan Against Property:

Different financial institutions require different documents for approving the property loan. But some of the documents are mandatory for all financial institutions. Here is a list  of some important documents which are necessary for availing the mortgage loan.

  1. PAN card 
  2. ID proof
  3. Address proof
  4. Passport-size photographs
  5. Bank statements
  6. Property ownership papers


Loan Against Property is often available by people in India to cover huge expenses when they need capital. It is a secured loan, but you can have plenty of time to recover the loan amount. But before applying for the property loan make sure to use a loan against property EMI calculator to have an approximate estimate of your EMIs. It helps the users to know the exact EMI amount he/she has to pay per month or per year according to his/her flexibility. It will help you reconsider if you are unable to pay that amount before taking the loan.