Loan Against Property (LAP) or mortgage loan is a type of secured loan offered by banks and Housing Finance Companies (HFCs) against commercial or residential property owned by the borrower. The amount, which is availed by keeping the property as collateral till the loan is fully repaid, can be used by the borrower for various purposes like expanding a business, funding children’s education, meeting medical expenses, and more. The maximum loan amount provided under LAP can go up to 70% of the property value. Along with being cost-effective, loans against property are reasonably convenient to avail and repay due to the relatively low mortgage interest rate.
The availability of higher loan amount and the flexibility to use the amount for various purposes make LAP a better option compared to a personal loan. Mentioned below are some of the features and benefits of availing a Loan Against Property.
The eligibility criteria for availing LAP varies from provider to provider. However, to provide you with an overview of the minimum requirements, mentioned below are some general conditions.
While availing a mortgage loan, certain charges are levied by the banks or the HFCs to process the loan. This amount varies from bank to bank and should be considered while selecting the financial institution. Let us take a look at these charges.
A distinctive feature of LAP is the flexibility to prepay the outstanding loan amount any time during the loan tenure. As per latest RBI guidelines, no prepayment charge is levied in case of individual borrowers, who have a floating rate of interest applicable on their loan against property. However, corporate entities are still charged a certain fee for prepayment, but it is minimal. Prepaying your loan amount helps to bring down the outstanding principal amount.
Prepayment of the outstanding amount under Loan Against Property offers various benefits. Some of them are: