Loan against property (LAP), is one of the alternatives of personal loan, that a customer can avail by keeping their property as mortgage with the loan lending bank or financial institution.
Banks provide loan against both commercial and residential property. Although such property is mortgaged to the loan lender, but the customer can still continue using it for residential or commercial purposes.
This is a secured loan as the property of the customer is kept as collateral with the bank.
LAPs are highly preferable in India as these loans are easily available in banks or loan lending financial institutions. These loans offer a lower rate of interest as compared to personal loans.
Different banks offer with options of fixed interest rate and floating interest rate for the customers to choose from. The interest rate for fixed rate loan against property remains constant throughout the loan’s tenure. Nonetheless, different banks charge different interest rates for fixed rate LAPs.
Floating or adjustable interest rate is not fixed. This type of interest rate varies on the basis of current market conditions.
LAP are also very easy to avail and repay as real-estate is mortgaged while availing the LAP and real-estate prices rarely plunge which makes them much safer.
Eligibility Criteria for Loan Against Property
Eligibility criteria for banks and other loan lending institutions are same for salaried professional and self-employed professionals/businessmen. They are as follows:
The applicant should be an Indian national with a minimum of 21 years of age at the time of submitting the loan application
The applicant should have been employed by an organization or been involved in business for certain number of years
Applicants should have the minimum required salary or monthly repaying capacity
Based on the income, savings, debt obligations and other than household expenses, the lender evaluates an individual’s repayment capacity
The eligibility for LAP is also calculated based on value of mortgaged property
Applicants should have good credit score and credit card payments on time for three months prior to submitting the loan application
Loan Against Property Eligibility Calculator
LAP eligibility calculator is used to calculate their eligibility for availing the loan.
This also helps to know the eligibility in various cities. While determining loan against property, the financial institutions look into the following factors – property value, total assets and liabilities, age of the applicant and their qualifications, repayment capacity, number of dependents on the applicant, spouse’s income, technical and legal aspect of the property.
Based on these factors bank decides the amount an applicant will receive as loan against property.
Loan against Property eligibility of top Indian banks
Loan against property SBI :
Applicant must be a salaried or self-employed professional. Individuals engaged in agricultural and allied activities can also apply for the loan. Maximum age limit for availing loan against property is 60 years. Net monthly income of salaried individuals is in excess of Rs.12,000/- or net annual income of self-employed individuals is Rs.1,50,000/-. In case of co-applicant or a guarantor, their income can also be added with the applicants net income.
Loan against property HDFC :
HDFC loan against property helps to meet the business needs, medical expenses, marriage and other personal needs. They also provide the facility for transferring outstanding loan availed from another bank/financial institution.
Loan against property ICICI:
ICICI provides loan to any Indian citizen at attractive rates for a tenure of 15 years. These are mostly availed for starting a new business, long term working capital, funding, children’s higher education, repaying high interest debts, etc.