How to Opt for a Loan Against Property

Loan Against Property


With the Covid-19 pandemic hitting businesses hard, the need for money has increasedandmany have gone for debt. While personal loans are a choice many people make, there is a better option.

Loan against property!

A loan against property is a type of secured loan which is offered by banks and non-banking financial companies (NBFCs) against any sort of residential or commercial property. These loans are becoming highly popular because they are cheaper than a personal loan, the applicant can continue occupying the property, and they can be used for any purpose including business expansion, working capital as well as unanticipated medical bills, marriages, higher education, etc.

A loan against property is beneficial not only for individuals but also for business owners; which is why it’s one of the most popular MSME loans! A LAP keeps your savings intact and allows you to pay as per your comfort.

However, of course, there are certain things you must keep in mind before applying for a loan against property.

  1. Ownership of the property – The first and most important aspect of a loan against property is ensuring that the property against which the loan is being sanctioned is fully in the applicant’s name. All co-owners also need to be part of the loan and meet other criteria.
  2. Valuation of the property – Since the loan is sanctioned against the residential or commercial property, the loan amount will be decided after the lender appraises your property. This amount will be decided as per the current market valuation and not the past or future value. Banks and non-banking financial companies usually offer a loan up to 50 to 60 percent of the market value.
  3. Repayment of the loan – As the loan amount is significantly higher than other types of loans, the applicant must fulfill all criteria as prescribed by the bank or NBFC. The tenure of the loan can vary from 12 to 20 years depending on the organization.
  4. Loan against property eligibility – The repayment period and interest rates will depend on the eligibility of the applicant. The lender will evaluate your loan against property eligibility depending on your income statements, past loan repayment history, credit score, etc.

Before you opt for a loan against property, remember to keep these aspects in mind and research which bank or NBFC offers a loan that is suitable for your needs.

Banks such as ICICI Bank, HDFC Bank, Tata Capital, State Bank of India, Axis Bank, and non-banking financial companies such as EFL, Aditya Birla Finance, DHFL, Edelweiss Financial Services offer loans against property at attractive interest rates and flexible repayment tenures.

Loan against property eligibility includes:

For salaried employees

  • Must be Indian citizens residing in the country.
  • Must be between 28 years to 60 years of age.
  • Must be working employees of a private or public corporation or a multinational corporation with a minimum of 3 years of work experience.

Documents required for salaried employees

  • Latest salary slips.
  • Bank account statements of the last three months.
  • Pan or Aadhaar card.
  • Address proof.
  • Copies of the property documents.
  • IT returns.

For self-employed applicants

  • Must be Indian citizens residing in the country.
  • Must be between 28 years to 60 years of age.
  • Must be able to provide a steady source of income.

Documents required for self-employed applicants

  • Audited financial statements for 3 years
  • Bank account statements of the last six months.
  • Pan or Aadhaar card.
  • Address proof.
  • Copies of the property documents.

To summarize, a loan against property offers amazing flexibility, lower interest rates, higher loan amounts, and a longer repayment period. However, it’s crucial to remember that it is, after all, a loan and you need to be careful that you stay on top of all the requirements. Do your research, choose the right lender, and pay it back regularly and diligently.

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