11 Jan 2021

Financial setbacks are often unannounced; moreover, they can be quite stressful and burdensome if you lack the funds to back it. Unfortunately, most people might not have the additional funds to fall back on. For these people, a great option for additional financing would be availing a loan against property (LAP).

What is a LAP?

 A loan against property (LAP) is categorized as a secured loan. To avail this loan, a borrower must pledge a legally owned property as collateral. The lenders will have conditional ownership over this property until the loan is fully repaid. The loan borrower will remain the lawful owner of the pledged property throughout the loan tenure. The loan funds can be used to finance short-term needs like financing medical treatments, higher education/marriage, business expansion, etc.

The following are properties you can pledge as collateral to avail an instant approval on loan against property.

  • Residential and commercial properties (both self-occupied and rented)
  • Residential plot with no construction
  • Industrial properties

Tax Benefits on Loan Against Property

 LAP is sanctioned against the property pledged as collateral with the lender, who decides the loan amount based on the value of the pledged property. Most banks and financial institutions provide up to 70% of the property value as the loan amount.

  • Under Section 37(1) of the Income Tax Act, the borrower is entitled to avail tax benefits on the interest paid on LAP loan.
  • Under Section 24, you can avail LAP tax benefits on the interest paid if the funds are used for financing a home purchase. The maximum tax benefit one can avail under this section is Rs. 2 lakh.

 What can a LAP loan be used for?

 One significant reason for the popularity of Loan against Property is the flexibility of end-usage on the loan amount. The funds can be utilized for multiple purposes:

  • Healthcare and medical treatment
  • Cover business trip expenses
  • Business expansion
  • Financer higher education
  • Stock inventory financing
  • Finance marketing and promotion for business
  • Wedding expenses
  • Down payment of a high-value purchase, etc.

LAP Interest Rate

 Loan against property (LAP) can have a fixed or floating interest rate, the borrower can pick which interest rate system is advantageous to them. The LAP interest rate is comparatively higher than a home loan but is lower than the interest rates applicable on personal loans. At Finserv MARKETS, you can avail a loan against the property of up to Rs. 1 crore at an attractive interest rate and a flexible loan tenure that lasts up till 360 months. At Finserv MARKETS, the interest rate on loan against property for salaried individuals is 10-11% p.a.

Eligibility criteria for LAP

The LAP eligibility criteria may vary from lender to lender. Given below are some of the common factors that all loan borrowers need to qualify for.

  • The borrower’s income, savings, and the market value of the mortgaged property will be considered by the lender.
  • Salaried individuals between 23 to 70 years of age are eligible to apply for LAP.
  • The applicant’s employment status, financial standing, and credit score play a key role in determining the loan amount.
  • Lenders prefer borrowers with a clear repayment track record while still employed.
  • The maximum age limit for the maturity of LAP is 60 years for salaried individuals and 70 years for self-employed individuals.

Documents required for LAP Loan

For salaried individuals

  • Identity proof such as PAN Card/Aadhaar Card/Passport/Voter’s ID
  • Address proof such as PAN Card/Aadhaar/Passport/Utility Bill
  • Copy of the property documents
  • Applicant’s latest salary slips
  • Bank account statements of the previous 3 months
  • Income Tax Returns (ITR) filing

For self-employed individuals

  • ID proofs such as PAN/Aadhaar Card/ Passport/Voter’s ID
  • Address proof such as Aadhaar/Passport/Utility Bill
  • The applicant's bank statements of the previous 6 months
  • Copy of the property documents

A LAP loan is one of the best options to meet all kinds of financial requirements. At Finserv MARKETS, you can avail a loan against property of up to Rs. 1 crore at attractive rates and a flexible loan tenure that lasts up to 360 months. At Finserv MARKETS the interest rate on loan against property for salaried individuals is 10-11% per annum.

Moreover, Finserv MARKETS ensures that the entire application process of availing a loan against property (LAP) is convenient; hence, you need to submit minimal documentation to avail the funds. Upon loan approval, the funds will be disbursed to your bank account within 24 hours!

With the Finserv MARKETS app, you can track your loan status online and avail instant approval on LAP loans. To know the estimated EMI amount that is to be paid towards the loan, you can make use of the loan against property EMI calculator online and plan your monthly payouts with ease.

“Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.”