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The application process becomes simpler if you have a savings bank account with the bank to which you have applied for LAP
Taking debt, while not advisable, becomes necessary for some at different stages of life. If you have a need to get a lumpsum amount to fund a financial emergency, you may consider a loan against property (LAP) over a personal loan. LAP is a secured loan, the interest rate on which is lower than that on personal loan.
We have compiled a list of top nine banks with lowest interest rates and EMIs on loan against property of Rs 10 lakh for a seven-year tenure:
How loan against property works
You don’t require income proof to get a loan against property since it is disbursed against a collateral such as residential or commercial property. You may continue to occupy the property even after putting it as a collateral, but ownership transfers in the name of the bank. Once the loan is repaid, the ownership will be back in your name along with all the documents. You may get the loan against your rented property as well.
The application process becomes simpler if you have a savings bank account with the bank to which you have applied for LAP.
The lender evaluates the market value of your property before deciding the eligibility and the amount of loan. Remember that you do not get the full market value as a loan. There will be a loan-to-value ratio that differs from one lender to another. This is generally in the range of 60-70 per cent. The loan value depends on your credit score too.
While salaried and self-employed people can easily avail LAP, even unemployed people stand a good chance to fetch a loan against property. Since lenders have a collateral against the lending amount, the credit risk is lesser for them.
There is no restriction in terms of the purpose of loan as you have in home or car loan. You may take LAP for medical emergencies, home renovation, higher education for children, business expenses or even purchasing a property.
Before taking the loan against property, make sure that you have a structured plan to repay the loan. You don’t want to lose your property to the bank.