Loan Against Property (LAP) – A Detailed Guide

Today I will tell you about loan against property (LAP)

If you have a property that is free from any loan, then you can take a loan by keeping that property as collateral

What is loan against property?

Loan Against Property (LAP)

A Loan against Property (LAP) is a secured loan availed against a commercial or residential property kept as collateral with the lender. As the funds come with no end usage restriction, borrowers can utilize the funds for various purposes such as business expansion, weddings, child’s education, etc.

Benefits of LAP –

  • Simple approval process
  • Attractive interest rates
  • Continuous ownership
  • Easy and hassle-free documentation
  • Optimum use of a property
  • Claiming the interest as expenses (only for business person)

Eligibility criteria for LAP

A loan against property is offered to the following individuals –

a) Salaried – An individual who is in permanent service in the government or a reputed company. Further, he/she should be above the age of 24 years at the time of loan commencement and up to the age of superannuation.

b) Self-employed Businessmen – Any individual filing Income Tax Return (ITR) and who is over 24 years of age at the time of loan commencement and up to 65 years at the time of maturity.

c) Self-employed Professionals – Professionals such as doctors, engineers, dentists, architects, chartered accountants, cost accountants, company secretaries, and management consultants can apply. The age criterion is similar to that of self-employed individuals.

Documents required for LAP

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Salaried Individuals Self-Employed Professionals/Businessmen
  • Application form, photograph attached
  • Application form, photograph attached
  • Valid photo identity (such as Voter Id card, Passport, Aadhaar Card, Pan Card, Driving License)
  • Valid photo identity (such as Voter Id card, Passport, Aadhaar Card, Pan Card, Driving License)
  • Proof of current residence
  • Proof of current residence
  • Latest salary slips (minimum 3)
  • Proof of business existence, Certificates of educational 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

Can I take a loan against the property for any reason?

Loans against the property can be taken for the following purposes. They are as follows –

  • For Business Expansion
  • Getting your son/daughter married
  • Sending your son/daughter for higher studies abroad
  • Funding your dream vacation
  • Funding medical treatments

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

The maximum loan amount a person can get against LAP is up to Rs 25 crore. However, the LAP should not exceed above 60% of the market value of the property. The maximum loan availed will vary from bank to bank.

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?

The maximum repayment tenure of LAP is 15 to 20 years. Whereas the interest rate will vary from bank to bank but the interest rate will range somewhat between 9.80% p.a to 16.60% p.a.

Conclusion –

This was all that I wanted to share in this article. You all can post queries in the comment section.

FREE GIFT – A detailed Blackbox file for your family

Dear readers

Today we are releasing a FREE, very exhaustive and detailed google sheet for everyone which can act as a single point of information for your family to access all your data and information related to your financial life.

In this COVID Pandemic, a lot of families lost a family member and in many cases, it was the main breadwinner of the family. This left them in a situation where they had no idea about the insurance and investments made. They had to literally find each and every small piece of information from scratch and it was a very frustrating experience.

A lot of this be avoided if one just creates a master document file (also called as BlackBox file) and save all the information in that and share that file with their family.

We released it on Twitter platform, which has the link to COPY it on your google drive.

Can I request you to like the tweet and also retweet the same so that it can reach more and more people.

What all does this BlackBox file has?

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  • Assets and Liabilities Section
  • Checklist of what to do after the death of account holder
  • Term Insurance Claim Process
  • Banking Claim Process
  • Mutual Funds Claim Process
  • PPF & EPF Claim Process
  • NPS Claim Process
  • Property Claim Process
  • Demat Claim Process
  • Video on 20 things to do post-death of a family member (English & Hindi)
  • Intro video on about this Sheet

Please copy the master file in your google account and fill it up and then share it with your spouse/family members. Do share this link in your office platform or other WhatsApp groups you are part of.

Also, do share your feedback about the sheet and if you liked it?