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Everything You Wanted to Know About Loan Against Property

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  • Loan Against Property Meaning

  • Why Should You Consider Taking a Loan Against Property?

  • Loan Against Property Interest Rate

  • How to Apply for a Loan Against Property?

We all have those moments when it becomes absolutely necessary to meet a specific or urgent financial need. And what if we tell you that there is a way to access your bailout funds without breaking the bank? There are various sources from which you can get loans: friends, family, or financial institutions – but the safest best is always an established lender – offering you loan amount sanctions through an official way.

This is where you can benefit from the Bajaj Housing Finance’s loan against property option that not only offers you a loan at competitive interest rates, it also gives you sizeable loan sanctions, based on your credit profile.

Today, a loan against property (LAP), also known as a property loan, is the preferred option and is considered a more assured means of finance for any purpose. And the best part is that you can spend the loan money however you deem fit.

Regardless of your employment status, financial status, owning a landed property guarantees you access to secured loans against property. This article will address the below listed questions:

  • What is a property loan?
  • What is a loan against property?
  • What is a loan against property interest rate?
  • What are the details on how to apply for a loan against property?

In this article, we will explain property loan meaning, LAP loan meaning, mortgage loan calculator, and other important things you need to know to make the right decision while considering a property loan. Read on to understand everything you need to know about a loan against property.

Loan Against Property Meaning

What does a loan against property mean? In simple terms, a loan against property refers to a secured loan that an individual can obtain through banks, mortgage financing agencies and non-banking financial companies (NBFC), with a residential or commercial, landed property used as collateral.

The use of a property as collateral is why this type of loan is termed a secured loan. Your property is an asset that is used as collateral (a form of security or insurance) for this loan. This is a significant difference compared to other forms of loans, such as personal loans and others.
However, considering the following points will aid your understanding of why a loan against property is the ideal loan:

  • The amount you require
  • The urgency of the need
  • Repayment ability and options

Why Should You Consider Taking a Loan Against Property?

Having discussed the loan against property meaning, a major question to answer is: Why should you consider taking a loan against property? The previously discussed points are basic things to think about while considering a LAP loan.

Nevertheless, a comparison of loans against property versus other loan forms, such as personal loans, in the table below is suggestive of why loans against property remain a worthwhile option.

Loans Against Property Other Loans
They are secured They are mostly unsecured
They offer a higher loan amount (You can get up to 60% or 70% of your property’s worth) The loan amount offered is limited (It is usually based on your income, credit score or portfolio, and repayment abilities).
They have a longer loan tenure spanning several years. They have shorter tenures (Usually limited to days or months).
They have low-interest rates. They come with high-interest rates.

A loan against property remains the most preferred source of financing for individuals, businesses, corporate or industrial entities in India and other countries alike, and this is based on the above points. More reasons on why a LAP loan might be the best for you are discussed in subsequent sections.

Loan Against Property Interest Rate

Loans against property interest rates are usually low and cost-effective because they have longer repayment periods spread over several months or years. The interest rates in India vary, ranging from 8.2=35% to 14.5%. Interest rates are set after:

1. Review of your credit score

This is conducted in a bid to ascertain your repayment capacity, which enables both you and the lender to reach a repayment option or plan that best fits you.

2. Your income levels

The interest rate requirements vary among NBFCs and banks alike. However, you can also check a Mortgage Loan Calculator to know your LAP EMI quotient for a loan against a property application.

How to Apply for a Loan Against Property

There are two application categories for loans against property:

  • Salaried individuals
  • Self-employed individuals

However, it’s important to note that the application process, fees, and necessary documents may vary for different banks, mortgage financing agencies and non-banking financial companies (NBFC) and are likely to be further reviewed at their discretion.

1. Salaried individuals

This is for individuals who are salaried employees of a public or private sector organization, such as public or government, and private sector employees either local or international. The age requirement for this category is between 28 and 60 years, resident in India. Documents to be presented by these individuals include but are not restricted to:

  • Application forms
  • Valid proof or means of identification
  • Proof of existing residence
  • Recent salary slips ranging from 3 to 6 months
  • Bank statements for the last six months

2. Self-employed individuals

This category of individuals must be business owners, residing in India and aged from 25 years to 70 years old. Documents to be presented by this category of individuals also include, but are not restricted to the following:

  • Proof of income
  • Valid identification
  • Proof of current address
  • Proof of business. i.e. business certificate
  • Both business and personal bank statements for the last 6 months

Asides from the presentation of necessary documents, also evaluated is the property of the applicant, which is done to ascertain the market value of the property. This is conducted to determine the loan amount that will be offered.

Repayment

You must repay the loan over the period stipulated, and this is why the loan is set for a long period (2 – 18 years), within a specified age bracket, believed to be your active years where you can repay the loan. Defaulting on the loan empowers the financial institution or lender to take ownership of the pledged property in a bid to recover the loan granted.

Final Thoughts

Getting financing through loans against property is a veritable means for you as an individual to meet any need that may arise. The benefits of low interest rates, loan tenor and even the opportunity to top-up on the pre-existing loan as offered by several lenders are enough reasons for you to apply for a loan against property today.

Bajaj Housing Finance provides you with the best loan against property options across India – wherever there are branch operations. Take advantage of our competitive interest rates and lenient lending terms and approach us for the ultimate ease of borrowing.
Apply here.

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