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09 Jul
  • SFX Entertainment Technologies Pvt. Ltd (Content Curator)
Surviving a pandemic is not easy, especially when a professional’s job role becomes redundant or a business has to bear unprecedented losses. Moreover, any emergency situation related to health or natural calamity can add on to the financial pressure during these hard times. In such a scenario, a Loan against Property can come to your aid and meet both short and long term expenses, be it for your business or personal needs. Since the loan is availed by the borrower by liquidating his property, it gets approved without much hassle.

Here is how a loan against property or LAP can help tide over challenging times.
  • Possible to meet multiple needs – If you are a business owner, a loan against property can help you fund everything from daily business operations to growth and expansion projects. You can even get a business started from scratch with this loan. A LAP can also meet emergency and large medical costs, especially since the pandemic has put everyone at risk. With this loan, you can pay your child's educational expenses, especially if he or she is pursuing higher education. A LAP can be used to meet everyday household expenses as well, in case you have lost your job and are not sure when you might find a dependable position again. Since the COVID outbreak has been followed by natural calamities in some parts of India, the loan can be used to meet repair and renovation costs related to your home or other establishments.
  • Long tenure reduces EMIs–Since LAPs have long tenures, the EMIs become small and easier to handle. Also, the interest rate becomes affordable as the loan is taken against a collateral. However, note that long tenures can also increase the total interest cost you pay.
  • You can get a large loan amount – Based on the valuation of the land or property or asset that you pledge as collateral, the loan amount can be quite large, if compared to personal loans. Leading financial institutions might offer up to 65% of the property value. This can easily help you meet various needs.
  • Ownership of collateral ensures mental peace – Though you are offering a land or property as collateral for the LAP, you will continue to own it during the repayment period. During hard times, this can give you mental satisfaction, knowing that you have not lost your property to the lender. However, remember that in case of default, the lender can sell this collateral to recover the loan amount.
  • No need to sell any asset – Taking a loan against property also means that you will not have to sell any land, property or other asset, to get the money you need. Hence, mental stress will be reduced.
  • You benefit from online application and easy documentation –It can be tough to venture outside during a pandemic or if you are caught up at home, to apply for a LAP.

So, most financial institutions enable online application through a few easy steps. The documentation is basic and their soft copies can be uploaded on the lender’s website for approval.
Also Read: Beginner’s Guide For Taking A Loan Against Property

Things to note before applying for Loan against Property
Make sure you keep these tips handy:
  • Eligibility criteria – Only those between the ages of 25 and 55 years can apply. Both salaried and self-employed individuals will need to have spent a minimum time in their present job or business.  
  • Documents –Apart from identity and address proofs, you need to provide income proofs, property-related documents and passport-size photographs. Income proofs for salaried individuals can include appointment letter, bank statement and salary slips. Business owners can provide registration certificates and income tax returns.
  • Loan amount –You cannot apply for a loan amount that is greater than the property’s value.
  • Research and compare – These days, there are many financial institutions offering LAPs. So, thorough research is needed along with comparison of loan features, interest rates, tenures and fees. Also read terms and conditions of every lender carefully before deciding to go with one.
  • Loan disbursal and repayment capacity – Disbursing a loan against property takes a minimum amount of time as the lender will crosscheck all documents before approval. So, make sure you have some funds with you till you get the loan amount. Also, before deciding on the EMI, assess your monthly budget and see how much you can actually pay towards the loan.

    Related Content: Common FAQs about LAP.
To conclude
A loan against property can be a boon during challenging times, as you can simply pledge an idle asset as collateral and get the funds you need to survive and rebuild your future. However, being aware of what it entails will make the application and repayment process easy.
If you want to know more about taking a loan against property, read here.

Did You Know


The act of paying out money for any kind of transaction is known as disbursement. From a lending perspective this usual implies the transfer of the loan amount to the borrower. It may cover paying to operate a business, dividend payments, cash outflow etc. So if disbursements are more than revenues, then cash flow of an entity is negative, and may indicate possible insolvency.

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