What is LAP?

A LAP is a secured, high-value advance available against the mortgage of a residential or commercial property. The funds come with no end-use restriction and can be used to fulfil multiple financial objectives requiring lump sum expenditure.

LAP full form is loan against property.
 

The advance is available for an extended tenor, which makes it affordable to repay. Lenders also provide customised loan against property to meet specific expenditures like wedding, education, business expansion, home renovation, debt consolidation, etc.

Other characteristic features like competitive interest rates, customisation as per applicant’s employment status, etc. also define LAP.

What are the Features of a LAP?

• High-Value Funding


Avail high-value funding of up to Rs.3.5 crore as a self-employed applicant. Salaried individuals can avail a loan against property of up to Rs.1 crore.

• A Long Tenure of Repayment


For salaried applicants, a repayment tenor of up to 20 years is available. Self-employed applicants can opt for a tenor of up to 18 years.

• Fast Loan Approval and Disbursal


Receive quick loan approval against minimal eligibility and documents. Also, with Bajaj Finserv, the loan is disbursed to your account within 4 days of approval.

• Easy Balance Transfer Facility


Avail a convenient loan against property balance transfer facility to enjoy repayment at lower interest rates. A high-value top-up is also available over and above the balance transfer amount under this facility.

 

What are Documents Required for a LAP?


Documents required to apply for a LAP include –
a. Aadhaar Card, PAN, Voter ID, Passport, Driving License, etc. as proof of identity and address.
b. Bank account statements (3 months if salaried and 6 months if self-employed).
c. Mortgage documents.
d. Income tax returns.
e. Latest salary slips (only if salaried).
f. Proof of business registration – GST registration certificate, trade license, partnership deed, Udyog Aadhaar Memorandum, etc. (only if self-employed).
 

What are the Eligibility Criteria for a LAP?


Eligibility criteria to apply for a LAP include –
a. Age between 33 and 58 years if salaried, 25 and 70 years if self-employed.
b. Salaried applicants to be employed with an MNC or private/public sector company.
c. Self-employed applicants have a regular source of income.
d. A credit score of 750 or above.
 

What are the Benefits of a LAP?

 

I. Zero End-Use Restriction


A LAP is a high-value advance which can be used to meet diverse expenses like –
• Higher education,
• Wedding arrangement,
• Home renovation,
• Debt consolidation,
• Business investment,
• Purchase of another asset, etc.
 

II. Offers Income Tax Exemptions


Income tax exemptions on LAP depend on the end-use of the funds. For instance –
• Use it for home renovation to avail an exemption of up to Rs.30,000 under Section 24(b).
• Utilise the loan amount for house construction or purchase to avail deductions up to Rs.2 lakh under Section 80(b).
• Under Section 37(1), claim tax deductions on the utilisation of loan for business purposes. The exemptions are applicable if the loan amount is utilised for specific expenses not covered under Section 30 and 36.

 

III. Competitive Rate of Interest


A LAP is secured by a mortgage and reduces the lenders’ risk, allowing them to offer it at lower rates of interest compared to unsecured advances like personal loans.
 

IV. Affordable EMIs


You can opt for an extended tenor of up to 20 years and pay EMIs affordably. Further, Bajaj Finserv’s Flexi Loan facility allows you to make multiple withdrawals from a pre-sanctioned loan amount. Interest is charged only on the amount withdrawn, thus making EMIs further affordable.

The amount of loan against property a borrower receives depends on the current market value of the mortgaged property, among other factors. LTV is another essential factor that affects the amount of loan against property a lender sanctions.
 

What is the Role of LTV in LAP?


LTV or loan to value is the amount a financial institution is ready to lend as a percentage of the assessed market value of the property to be mortgaged. It usually ranges between 75% and 90% of the property’s current market value and is thus an essential information for borrowers.

A LAP’s LTV depends on several factors like –

The borrower’s –
• Monthly income,
• Credit score,
• Credit history,
• Age, etc.


The property’s -
• Condition,
• Amenities,
• Location, etc.

Opt for a loan against property to fulfill all your big-ticket funding requirements. Also, make EMI payments in time to strengthen your credit score.