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Introduction
Loan against Property (LAP), also known as mortgage loan, allows consumers to raise funds by leveraging their residential, commercial or industrial properties. Like unsecured personal loans, Loan against property (LAP) can also be availed for meeting both personal and business needs other than speculative purposes. Banks and HFCs offer loan against property for tenures of up to 20 years. The loan amount for LAP can go up to 75% of the property’s market value, depending on the lender and the credit profile of the borrowers. Many lenders also offer Lease Rental Discounting (LRD) facility, which allows consumers to avail loan by pledging the rental receipts of their tenants.
Features & Benefits of Loan Against Property
- Lower interest rates: The secured nature of the loan reduces lending risk of banks and NBFCs considerably, thereby, allowing them to offer the loan at lower interest rates.
- No end use restrictions: Loan proceeds can be used for any purpose such as for consolidating multiple high-interest debts, covering costs related to wedding, business expansion, etc.
- Longer loan tenure: Banks and NBFCs offer tenures of up to 20 years on loan against property, resulting in more affordable EMIs.
- Higher loan amount: Lenders usually finance up to 70% of the property value, resulting in higher loan amounts.
- Higher chances of loan approval: The loan is backed by any underlying property, thus, reducing lending risk for banks/NBFCs and increasing borrowers’ odds of availing the loan.
- Overdraft facility: Borrowers can also avail overdraft facility on this loan, giving them higher liquidity at lower interest cost.
Documents Required
Mortgage Loan eligibility differs across lending institutions and Loan Against Property . However, a common set of housing loan eligibility criteria is given below:
- Proof of Identity (Passport/ Voter ID Card/ Driving License/ PAN Card)
- Proof of Residence (Ration card/ Telephone Bill/ Electricity Bill/ Rental Agreement/ Passport/ Bank Passbook or Statement/ Driving License)
- Proof of Age (PAN Card/ Passport/ Any other certificate from a statutory authority)
- Proof of Income for Salaried (Form 16, Latest Payslips, ITR of past 3 years and investment proofs (if any)
- Proof of Income for Self Employed (Details of ITR of last 3 years, Balance Sheet and Profit & Loss Account Statement of the Company/Firm, Business License Details and Proof of Business Address)
- Property-related Documents (Title Deeds including the previous chain of the property documents, Nil Encumbrance Certificate on the concerned property, approved plan [if applicable])
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Name of Lender
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Interest Rates(p.a)
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Processing Fees
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|---|---|---|---|
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Bank of India
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10.10%-12.60%
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Up to 1% of loan amount (Rs 5,000 - Rs 50,000)
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Bank of Baroda
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10.85% - 18.60%
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Up to 1% (Rs 8,500 upfront - Rs 75,000
|
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Bank of Maharashtra
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10.45% - 11.95%
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1% of loan amount
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Federal Bank
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12.60% onwards
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1% of the limit sanctioned with a minimum of Rs. 3,000
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|
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HDFC Bank Limited
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9.50% - 11.00%
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Up to 1% of loan amount (minimum Rs 75,000)
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ICICI Bank
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10.85% - 12.50%
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Up to 1% of loan amount
|
|
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IDFC First Bank
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9.00% - 16.50%
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Up to 3% of loan amount
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|
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Indian Bank
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10.00% - 12.75%
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1% of loan amount
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|
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Indiabulls Housing Finance
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9.75% onwards
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1% onwards
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|
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Kotak Mahindra Bank
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9.50% onwards
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Up to 1% of loan amount
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|
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L&T Housing Finance
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9.50% onwards
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Up to 2% of loan amount
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|
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LIC Housing Finance
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9.50% - 11.55%
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Up to 1% of loan amount
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PNB Housing Finance
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10.40% - 12.75%
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0.75% of loan amount (Max. Rs 1 lakh)
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State Bank of India
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10.00% - 11.30%
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Flat Rs 10,000
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Tata Capital
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9.00% onwards
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Up to 1.25% of loan amount
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|
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Union Bank of India
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10.45% - 13.10%
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Up to 1% of loan amount (Min. Rs 5,000 & Max. Rs 1 lakh)
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UCO Bank
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10.85% - 12.00%
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0.50% of loan amount (up to Rs 2 lakh)
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