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  • Writer's pictureAnjali Verma

Explanation of LAP - Loan Against Property

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The phrase "home loan against property" is one that we frequently hear in the real estate and housing finance markets nowadays. A loan against property is simply a loan that you obtain using your residential or business property as collateral. A secured loan is another name for a loan against property. The borrower's property serves as security for this type of loan. Your potential loan amount is determined by the value of your home.

What is Loan Against Property?

A secured loan provided by banks, home finance companies, and NBFCs is known as a loan against property and is secured by either commercial or residential property. Unlike personal or company loans, these loans are typically offered at cheaper interest rates and disbursed within a fair amount of time. These loans are available to anyone with a pre-owned home, whether they are salaried employees or independent contractors working in a commercial or professional environment. Additionally, the loan amount sanctioned is greater than what might be provided by alternative options.

Types of LAP:

Based on the Property Type

1. Loan Against Residential Property: The most typical kind of mortgage loan is this one. People can borrow money against any residential property they own, including their homes. It could be unoccupied, rented out, or self-occupied.

2. Loan Against Commercial Property: This option enables owners of commercial real estate, such as an office building or an industrial facility, to borrow money against the property's current market value.

3. Lease Rental Discounting: You use a rented property as collateral for this kind of loan against the property. The EMIs are represented by the fixed rental income, and this information is used to calculate the acceptable loan amount.

Based on an Applicant’s Employment Type

1. Loan Against Property for Salaried: People who get a salary are allowed to borrow money against their property. For this, he or she must be between the ages of 25 and 70 and employed by an MNC, as well as any other public or private company.

2. Loan Against Property for Self-Employed: Self-employed Borrowers can also use Loan Against Property to get an advance. He or she must be between the ages of 25 and 70 and be able to demonstrate a reliable source of income with a minimum of 5-year business continuity.

Based on Usage

1. Loan Against Property for Education: Use a loan against property for education to pay for higher education costs like tuition and the price of books. The money can be used by borrowers to pay for things like lodging and travel expenditures.

2. Loan Against Property for a Wedding: Numerous expenses are associated with a wedding, including meals, decorations, and bridal makeup. Use a loan against property to pay for wedding expenses easily.

3. Loan Against Property for Debt Consolidation: Utilize a loan against property to consolidate all of your current debts into one. It lessens the cost of interest and the inconvenience of handling numerous repayments.

Benefits of LAP:

  • Low-Interest Rates: One of the biggest benefits of a loan against property is that it has low-interest rates. Due to the fact that a loan against property is secured, the interest rate is lower because there is little risk involved. A lower interest rate results in more affordable monthly payments (EMIs).

  • Longer Repayment Period: If you choose a loan against property instead of an unsecured loan, you will have a longer repayment period. Because most borrowers prefer low-interest rates and lengthy payback terms, LAP (Loan Against Property) is a lucrative alternative. One of the main benefits of a loan against property is lower EMIs.

  • Continued use of the asset: The best thing about mortgaging your home for a loan is that you retain ownership of it even after you mortgage your home. As long as your property is being used as collateral for your loan, you can still use it. You can obtain a mortgage for a variety of real estate kinds, including self-occupied or rented-out properties, which could be either residential or commercial spaces like office buildings, stores, malls, complexes, and more.

  • Increased Loan Amount: Whether for personal or business requirements, a loan secured by property can help you pay for large-ticket items. You typically receive financing up to 75% to 100% of the market value of your property because it is a secured loan. Due to the fact that it is a collateral-based loan, it has lower interest rates and longer terms, which raises your loan eligibility and enables you to be approved for a larger loan amount.

Banks providing loans against property in India:

  • SBI

  • HDFC

  • IDFC

  • Tata Capital

  • Axis Bank


A loan against property is a secured loan that banks and NBFCs approve against real estate, whether it be residential or commercial, for both private and commercial purposes. Additionally, loans are typically provided at a cheaper interest rate than any unsecured loan.

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