What is LAP Loan and How Does it Benefit You?


If you are in need of a large sum of money for personal or business use, it is worthwhile to consider applying for a loan against property, often known as a LAP loan. In some cases, it is also referred to as a mortgage loan as you are required to pledge a self-owned property as mortgage in order to gain funding. The funds you receive through this secured offering are primarily based on the market value of the property you pledge along with other factors such as your financial and credit profile.  

What is an LAP loan and how can you reap its benefits in the best possible way? Read on to learn more. 

What is an LAP loan and how can you qualify for it?

Before you apply for it, you must understand the meaning of the LAP loan and its eligibility terms. A mortgage loan is similar to other types of loans in most aspects, with the only difference being that the lender assures you a loan by using your house or other property as collateral. In the event of a loan default, the ownership gets transferred to the lender.

In order to qualify for a loan against property, the borrower must submit a few KYC documents to the lender. These are: 

  • Identity proof
  • Proof of residence
  • Salary slips (if employed)
  • Documents of the property to be mortgaged
  • Bank statements for the last six months
  • Certified financial statements of previous three years (self-employed applicants)

The eligibility criteria as well as the mortgage loan interest rates may vary for self-employed and salaried borrowers.

The loan-to-value ratio is also an important pre-requisite for a mortgage loan. It refers to the ratio of the value of a property and loan amount sanctioned against it. It is the highest loan amount a customer can qualify for based on the current market value of the mortgaged property. A lower ratio is helpful if you wish to apply for a loan that comes with added features and benefits. 

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A loan against property is primarily used for business needs, though its usage can extend to other purposes such as funding education and constructing or purchasing another property. It is advisable to opt for such loans after enough deliberation and planning as putting your property or house at stake is a risky proposition. If you are confident that your income will support you during repayment, however, you can apply for this loan stress-free. 

What are the benefits of a LAP loan?

Apart from a low property loan interest rate, some of the main advantages of a loan against property are:

  1. Access to large amounts of funds
  2. Long repayment schedule going up to 20 years 
  3. No restriction on end usage
  4. Helpful credit facility for debt consolidation

What should you keep in mind when applying for a mortgage loan?

While opting for a loan against property, it is important to consider these factors:

  • It is crucial to consider the loan tenor. It is not advisable to opt for a longer tenor just because it is available. If it is possible, opt for a short tenor as that reduces the interest you need to pay and makes your EMIs more manageable.
  • You must go through all the terms and conditions associated with the loan thoroughly and have a clear understanding of what they mean before you sign any documents. 
  • Due diligence is an important step when it comes to selecting the right lender for your loan against property. It is necessary to compare the loan against property interest rates offered by different lenders and opt for one that is the most affordable.
  • Although a loan against property is a secured loan, evaluating your credit score is of prime importance in the loan application process. Higher the score, better the chances of approval and availing the loan on favourable terms.
  • Processing a loan against property may take time as the lender needs to carefully evaluate the mortgaged property on different parameters. You should ask the lender for an approximate time frame within which the disbursal and other formalities will be completed so that you can proceed with your upcoming financial commitments accordingly.
  • It is better to know how much your EMIs will amount to in advance so that you know what to expect every month. You can calculate your EMIs online using a simple tool known as the loan against property calculator. 

When secured from a trusted institution on favourable terms, a loan against property can be an affordable and comfortable way of financing your personal and business goals. Understand the LAP loan meaning and compare the different offers carefully in terms of the property loan interest rate to find one that is the most suitable. Calculate your EMIs beforehand using the loan against property calculator so that you can accommodate them in your financial plans.


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