Need a large loan but don’t want to sell your property? A Loan Against Property (LAP) might be the perfect solution. It allows you to unlock the value of your property and access funds for business, education, medical emergencies, or personal needs — all while keeping ownership intact.
In this article, we’ll explain everything you need to know about LAP — including eligibility, interest rates, required documents, repayment tips, and more.
What is Loan Against Property (LAP)?
A Loan Against Property is a secured loan where you pledge your residential, commercial, or industrial property as collateral to get funds from a bank or NBFC. The loan amount is usually a percentage of your property’s current market value — typically up to 70–80%.
Eligibility Criteria for Loan Against Property
Eligibility may vary slightly between lenders, but the basic criteria include:
1. For Salaried Individuals:
- Age: 21 to 60 years
- Stable job with a minimum of 2–3 years of experience.
- Property should be in your name or jointly owned.
2. For Self-Employed/Business Owners:
- Age: 25 to 65 years
- Regular income with proper documentation.
- ITRs for the last 2–3 years
- Proof of business continuity
Loan Against Property Interest Rates & Charges
Interest rates on LAP are generally lower than other loans, making them an attractive option for large funding needs.
| Lender Type | Interest Rate (Approx.) |
| Banks | 8.90% – 12% p.a. |
| NBFCs/Fintech | 9.50% – 15% p.a. |
Other Charges:
- Processing Fee: 0.5% – 1% of loan amount.
- Legal/valuation charges: May apply separately
Documents Required for LAP
Having the correct documents ready can speed up your loan approval:
1. For Salaried Individuals:
- PAN & Aadhaar
- Salary slips (last 3 months)
- Bank statements (Min 1 Year)
- Property papers with complete chain and map.
- Form 16 / ITRs
2. For Self-Employed / Businesses:
- PAN & Aadhaar
- ITRs (last 2–3 years)
- GST Certificate or business registration proof
- Bank statements (last 12 months)
- Proof of business ownership
- Property documents with complete chain and map.
Loan Tenure & Repayment Tips
1. Tenure: LAPs typically offer longer tenures — up to 15–20 years, depending on lender and age of applicant.
2. Smart Repayment Tips:
- Choose longer tenure for lower EMIs, shorter tenure for less interest payout.
- Opt for part-prepayment whenever you receive a bonus or surplus income.
- Use an EMI calculator to plan your budget and avoid over-borrowing.
- Avoid defaulting — it may lead to loss of your property.
Advantages of Loan Against Property
- Lower interest rates than unsecured loans
- High loan amount (up to ₹5 crore or more)
- Longer repayment period
- Continue using the property even after mortgaging.
- Suitable for business expansion, education, weddings, and more.
Things to Consider Before Taking LAP
- If you fail to repay, your property may be auctioned by the lender.
- Processing and legal charges can be slightly higher than personal loans.
- Ensure your income can comfortably handle the EMI load.
Conclusion
A Loan Against Property is a powerful financial tool if used wisely. Whether you’re planning to expand your business, fund a medical emergency, or cover education expenses — LAP offers a low-cost, high-value funding option. Just make sure to evaluate your repayment capacity and avoid pledging your only home unless necessary.
Frequently Asked Questions (FAQs)
Q1. Can I get LAP on an inherited property?
Yes, as long as the title is clear and the property is legally registered in your name.
Q2. Is CIBIL score important for LAP?
Yes. While it’s a secured loan, a good CIBIL score (700+) helps you get better rates and faster approval.
Q3. How much loan can I get against my property?
Generally, 50%–70% of the property’s current market value.
Q4. Can I get LAP if the property is jointly owned?
Yes, but all co-owners must be co-applicants in the loan.
Q5. What happens if I prepay the LAP early?
Most lenders allow partial or full prepayment, often with no penalty on floating rate loans.