A Loan Against Property (LAP) is one of the most cost-effective ways to borrow a large amount of money. By using residential or commercial property as collateral, borrowers can access funds at lower interest rates compared to personal loans.
This guide explains how LAP works, who should consider it, and how to use it safely.
What Is Loan Against Property?
LAP is a secured loan where you pledge your owned property to borrow money. The property remains in your name, but the lender holds rights until repayment is complete.
Who Should Consider LAP?
LAP is suitable for:
Business expansion
Debt consolidation
Medical emergencies
Large planned expenses
It is not ideal for short-term or unnecessary spending.
Eligibility Criteria
Eligibility depends on:
Property ownership and legal clarity
Applicant’s age and income
Credit score
Existing liabilities
Interest Rates & Tenure
LAP interest rates are lower than personal loans because property reduces lender risk. Tenure can extend up to 15–20 years.
Property Valuation & Loan Amount
Loan amount depends on property value and location. Lenders usually offer a percentage of market value.
Risks Involved
Defaulting can lead to property seizure. Borrowers must ensure EMIs are affordable even during income fluctuations.
Documents Required
Property papers
Income proof
Identity proof
Bank statements
Smart LAP Usage Tips
Borrow only what you need
Maintain emergency funds
Avoid using LAP for luxury expenses
FAQs
Can rented property be used?
Yes, in many cases, if ownership is clear.