What is a Loan Against Property: Everything You Need to Know

Having a home of one’s own is the dream of most Indians. It is considered as their biggest asset. However, it is often the most underutilised. For the uninitiated, a loan against property (LAP) is a great way to turn that value into working capital. It offers a practical way to raise funds without giving up on ownership, be it for business or financing a big goal. Mortgage loans like LAP offers flexibility, longer tenure, and lower rates.

What is a Loan Against Property?

When you pledge your owned property to get funds from a bank, digital lender, or NBFC, that process is securing a loan against property. The ownership of the property stays with you; however, the lender holds the legal rights until you have repaid the loan fully. The best part about this loan is that it allows the borrower to continue using the property, whether it’s for living, renting, or business operations, while accessing a sizeable sum of money.

When Should You Consider a Property Loan?

Loan against property is usually taken when someone needs a large amount of money for several reasons. Unlike specific loans like a car loan or education loan, LAP does not tie you down to any one particular purpose. A property loan gives you the liberty to use the money as needed be.

LAP is considered a solid substitute to unsecured loans. When you compare funding options, the cost-benefit of a mortgage loan often tips in its favour as it comes with a lower interest rate. A good aspect about LAP is that you can borrow a higher amount, choose a longer repayment tenure, and continue using your property during the period. Digital platforms like Kissht make this even easier by providing clarity and speed.

However, before applying, it’s important to calculate how much you can borrow and what the monthly EMI would look like. A loan against property calculator can help you make informed decisions. By entering the loan amount, interest rate, and tenure, you can get a clear picture of your financial commitment. This helps in planning your repayments without straining your monthly budget.

The Mortgage Loan Process

Here are a few steps for applying a LAP.

Your loan against property eligibility will be assessed, which includes factors like age, income stability, credit score, and the legal status of the property. Most salaried and self-employed individuals between the ages of 25 and 65 can qualify, provided the documentation is in order.

The next stage involves property valuation, income verification, and background checks. Once approved, you’ll be offered a loan amount usually between 50% and 70% of the property’s market value. You’ll also receive terms detailing your interest rate, EMI, tenure, and any processing charges.

Getting a Loan Against Property

While traditional banks can be time-consuming, digital platforms like Kissht offer a smarter route. Kissht’s online loan app simplifies the mortgage loan process, from checking eligibility to submitting documents. There’s no need for multiple branch visits or lengthy paperwork. With just a few steps on your smartphone, you can apply, upload documents, and track your loan approval status in real time.

This is especially helpful for those with urgent financial needs or those who prefer digital convenience. Kissht also enables quick comparisons, making it easier to find the loan against property lowest interest rate suited to your profile.

Loan Against Property Interest Rate and Charges

LAP is a preferred choice because of the rate of the interest. Lenders often offer better terms as it’s secured. The loan against property interest rate usually starts from around 8%. It may differ based on your credit score, property location, loan amount, and tenure. Look for other charges like processing fees, valuation costs, and potential foreclosure penalties.

Even a small difference in rates can impact your total repayment significantly over a 15–20-year term.

FAQs

What is the difference between a LAP loan and a personal loan?

A LAP loan is secured against property and usually offers a lower interest rate, higher loan amounts, and longer repayment periods. Personal loans, being unsecured, are quicker to process but tend to be costlier and smaller in value.

What affects loan against property interest rates?

There are many factors such as your credit score, income stability, property type and location, and the lender’s risk policies. Better scores and clean documentation will fetch you better rates.

Can I apply for a LAP loan if my property is rented out?

Yes, you can. A property can be mortgaged if you hold ownership and the title is clear.