What is a loan against property?

2 min

Loan Against Property (LAP), is a type of secured loan that allows you to apply for a loan by mortgaging your residential or commercial property. The money can be used for any purpose such as weddings, education, home renovation, hospital expenses, travelling, etc. The loan amount allotted to you is calculated basis of the value of the property pledged against the loan among other factors.

  • Competitive rate of interest: A loan against property is secured by a mortgage and reduces the lenders’ risk, so you can get lower rates of interest compared to unsecured loans
  • Fast approval and disbursal: Receive quick loan approval by meeting basic eligibility terms and submitting minimal documents. With Bajaj Finserv the loan is disbursed to your account within 72 hours* of approval
  • High-value funding: Avail ample funding based on LTV or loan to value ratio, which ranges between 80% of the property’s current market value. It depends on your profile as a borrower and other factors like property location and amenities
  • Zero end-use restriction: Use the funds to meet diverse expenses, be it higher education or purchase of another asset
  • Affordable EMIs: The lengthy tenor helps you pay EMIs hassle-free. Further, our Flexi Loan facility allows you to pay just interest as EMIs for the initial tenor, which further reduces your monthly outgo
  • Digital monitoring: Now keep a track of all your loan developments and EMI schedules through the Bajaj Finserv online platform
  • Long repayment duration: Salaried applicants can repay our Loan Against Property in up to 15 years* and self-employed borrowers in up to 15 years
  • Zero contact loans: Experience a truly remote home loan application from anywhere in India by applying Bajaj Finserv online home loans and getting an easy approval
  • Income tax exemptions: Depending on how you use the funds, you can enjoy tax benefits.

So, opt for a loan against property to fulfil all your big-ticket funding requirements.

*Conditions apply.

Documents required for a loan against property

Documents required to apply for a loan against property include 

  • Aadhaar Card, PAN, Voter ID, Passport, Driving License, etc. as proof of identity and address
  • Bank account statements (3 months if salaried and 6 months if self-employed)
  • Mortgage documents
  • Income tax returns
  • Latest salary slips (only if salaried)
  • Proof of business registration – GST registration certificate, trade license, partnership deed, Udyog Aadhaar Memorandum, etc. (only if self-employed)

Eligibility criteria for a loan against property

Eligibility criteria to apply for a loan against property include –

  • You must be between 25 years (18 years for non-financial property owners) to 85 years* (including non-financial property owners)
    * 85 years* of age or less at the time of loan maturity
  • Salaried applicants to be employed with an MNC or private/ public sector company
  • Self-employed applicants have a regular source of income
  • A credit score of 700 or above

Benefits of a loan against property

Benefits of a loan against property include

I. Zero end-use restriction

A Loan Against Property is a high-value advance that 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 Loan Against Property depend on the end-use of the funds. Can be used for home renovation to avail an exemption of up to Rs. 30,000 under Section 24(b). The loan amount can be utilized for house construction or purchase to avail deductions up to Rs. 2 lakh under Section 80(b). Under Section 37(1), can claim tax deductions on the utilization of loans for business purposes. The exemptions are applicable if the loan amount is utilized for specific expenses not covered under the Section 30 and 36.

III. Competitive rate of interest

A Loan Against Property 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 15 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 sanction.

*Conditions apply

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Frequently asked questions

What is the meaning of LAP?

A Loan Against Property (LAP), also known as a mortgage loan or property-backed loan, is a type of secured loan in which you pledge your residential or commercial property as collateral to obtain funds from a financial institution or lender. The property used as collateral could be a house, apartment, land, or commercial space.

What is the full form of lap?

In the financial and banking context, ‘LAP’ often stands for ‘Loan Against Property.’ It refers to a type of secured loan where borrowers use their property (usually residential or commercial) as collateral to obtain a loan.