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16 Oct

Loan Against Property: All You Need To Know

  • By Editorial Team
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With the multitude of financing options offered by various financial institutions in India, loan against property (LAP) is one of the most sought after financial products. Lenders and borrowers have different reasons for choosing this loan option against various other loan products. It gives the borrower immediate access to a lot of money by pledging their property as collateral or security against the loan.

What is loan against property?

Loan against property is a secured loan, wherein the borrower uses a property as collateral to borrow money from a financial institution. The property can be any commercial or residential building. The lender disburses the loan based on the property value and the borrower’s repayment capability.

Since it involves pledging of collateral, it gives the lender assurance that the borrower will pay back the due amount to gain back the ownership of the property. Failing which, the lender can sell the property or asset to the loss incurred.

Why take a loan against property?

Loans against property offered at attractive interest rates and for larger sums. The loans are extended for long repayment tenures due to which monthly payments will be lower than availing a loan without collateral. The easy and hassle-free documentation makes the processing of loans quicker and easier.

Are there any usage restrictions on loans against property?

The lender does not impose restrictions on the purpose of usage of this loan. This makes it an ideal solution for consolidation of debts. In addition, borrowers can use it for meeting their business capital needs, financing business expansion, wedding expenses, educational expenses of children, or meeting healthcare expenditure.

Are you eligible for a loan against property?

Salaried, self-employed professionals and businessmen are eligible for loans against property. Depending upon the eligibility of the borrowers, lenders often offer up to 60% of the property value as loan. The property value and the borrower’s monthly income are crucial determinants in deciding the loan amount. Shortlist a few reputed lenders to see whose terms are more flexible to suit your requirements.

Which documents do you need for a loan against property?

As in most other loans, loan against property requires you to submit your address and identify proof documents, documents confirming property ownership, proof of income in the form of last few months’ bank statements, and company registration documents in case of business customers. In addition to these, the borrower has to submit a completed application form.

Can you avail competitive interest rates for loan against property?

The interest rate for a loan against property can differ from one lender to another. Compare the rates offered by 2 to 3 lenders and go with the one that offers the best rate for a good loan amount. The amount of interest that you pay for the loan directly affects the monthly loan payments. The lesser the interest, the lower the EMI will be.

Can you apply for a loan against property from Hero FinCorp?

At Hero Fincorp, we offer loan against property for business customers,  salaried and self-employed professionals. Applicants with the minimum age of 25 years are eligible to apply. If you are a business customer, you need to in the business for a minimum of 3 years. You need to apply with address and identity proof, income proof (financial statements), company registration certificate (for business customers), and property papers. We offer the following for eligible customers:

  • Loans ranging from INR 50 lacs to 15 crores depending on the borrower’s eligibility and the property value.

  • Flexible loan tenures of up to 15 years.

  • Attractive interest rates.

  • Faster loan approval and disbursal.

  • Great LTV (loan to value) of up to 75%.

Those wanting to avail a loan against property through us can apply online following which our relationship officer will visit you to evaluate your documents and eligibility.

While loan against property is an attractive option to raise funds, do not forget to do your due diligence. Weigh the risks that come with a loan against property if you are not in a position to repay your instalments. Assess your options well and opt for a reputed lender who will offer the best terms and tenure before mortgaging your property.

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Credit Rating

Credit Rating is the process of assessing the credit-worthiness of an individual, company, business, or government and the probability of their defaulting. It is based on the past loan-related transactions of the borrower. A high credit rating means that the borrower is likely to make timely repayments, and a low rating means that he or she might default.

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