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Loan Against Property

Ever considered leveraging property for liquidity without having to sell it? A loan against property (LAP) allows you to do just that. For borrowers, this financial option is a powerful tool—whether you’re looking to expand your business, fund a luxury purchase, or make a substantial investment.

By using your residential, commercial, or industrial property as collateral, you can access large loan amounts at competitive interest rates. This flexibility provides quick financial access for high-value goals, all while allowing you to retain ownership of your valuable assets.

According to the Reserve Bank of India data, the demand for loan against property has steadily risen due to the lower interest rates when compared to unsecured loans. In fact, the average loan against property interest rate is typically lower than personal loans, making it an appealing choice for those seeking cost-effective borrowing options.

While we’ve covered what is loan against property,  for those looking to capitalise on their assets, here’s why a loan against property is a smart move:

Leveraging Property for Liquidity Without Selling It

For individuals, holding onto valuable properties is part of long-term wealth-building strategies. Loans against property offer a way to capitalise on passive assets while maintaining ownership.

Quick Financial Access for High-Value Goals

When an individual or business needs quick access to capital, whether to fuel business growth or invest in real estate, an instant loan against property is an effective solution that provides high-value liquidity without high interest rates.

Loans Against Property: A Closer Look

Loans against property come with several distinctive features that are tailored to meet the needs of borrowers. These include the ability to secure high loan amounts based on property value, flexible tenure options (ranging from short to long-term), and a variety of acceptable property types. Additionally, loans against properties offer competitive interest rates and diverse repayment options, including fixed and floating rates.

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Benefits of Loans Against Property with RURASH Financial

A loan against property offers multiple benefits, particularly for those with significant real estate assets. It offers liquidity without having to sell valuable properties, lower interest rates compared to unsecured loans, flexible tenure and repayment, and flexible usage of the loan amount. Moreover, it can be a valuable tool for tax benefits and wealth planning.

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How to Get a Loan Against Property

Obtaining a loan against property involves several steps, including meeting eligibility criteria, preparing required documentation, and navigating the application process. Financial aggregators play a crucial role in streamlining this process to ensure that property valuation and approval are handled efficiently to expedite loan disbursement. If you have considered looking up how to get a loan against property, here’s a simpler overview:

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Fractional Asset

Types of Loans Against Property

Loans against property can be categorised into several types based on the property involved. These include residential property loans, commercial property loans, and specialised loans for high-value properties like estates and vacation homes.

Residential Property Loans

Individuals who own real estate can use residential properties as collateral. These loans allow borrowers to leverage family homes, vacation houses, and other personal properties to gain capital for personal or business goals.

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Risks & Challenges of Loans Against Property

While a loan against property offers substantial benefits, it also comes with risks and challenges. These include potential impacts from market fluctuations on property value, the variability of interest rate, etc. which can affect long-term repayment amounts. Understanding these risks is crucial for effective management of loans against properties.

Market Fluctuations

Real estate markets are prone to fluctuations, which can impact both the loan against property interest rate and the loan amount. If property prices drop significantly, borrowers may face challenges when it is time to renew or extend the loan terms.

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Comparing Loans Against Property with Other Loan Types

When considering a loan against property, it’s essential to compare it with other financing options such as personal loans and loans against securities. Each option has its own advantages and limitations, and understanding these can help in making an informed decision based on individual financial needs.

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Expert Tips for Managing Loans Against Property

To effectively manage a loan against property, it’s important to understand the terms and conditions, stay informed about real estate market trends, and diversify repayment strategies. Here are some tips to seamlessly manage loans against property.

Understand the Terms

Before finalising a loan against property, thoroughly review the loan agreement. Pay close attention to:

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Have more questions? Quick Apply

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    * Loan amount should be between 10 lacs to 100 Crores.

    Features & Benefits

    • Affordable and high-value loans up to Rs. 3 Crore for self-employed individuals and 1 crore for salaried individuals
    • Borrowers can easily check the necessary details on an online portal and the entire process is easily carried out virtually.
    • Flexible tenure starting from 2 years and ranging up to 10 years along with the facility of part repayment at minimal charges
    • Minimal eligibility criteria and documentation
    • With a simple eligibility criteria and a limited list of documentation, applying for LAP and getting approval is a short and simple process.
    • Low EMI
    • Due to flexible tenure, borrowers can distribute the owed loan amount to reduce EMI.
    • Lower Rate of Interest and processing fee.
    • As compared to personal loans and unsecured loans, LAP offers lower interest rates which make LAP affordable.
    • Low to Nil Prepayment and Foreclosure Charges
    • If borrowers decide to prepay the loan, they don’t have to bear any prepayment charges. Even if they do, it’s negligible.

    Process To Apply For Loan Against Property

    • Check whether you are eligible for a Loan Against Property.
    • Fill out the required details.
    • Pledge your property as collateral.
    • Check your bank for the credited loan amount.

    Who can apply?

    • Salaried employees
    • Self-employed individuals
    • Business owners

    Documents Required For Salaried Employees:

    • Documents of the property the borrower wants to be mortgaged
    • Income tax returns
    • Account statement of the last 3 months
    • Latest salary slip
    • Address proof such as Aadhar card, voter ID utility bill passport ration card, or any other government-issued document
    • 2 Passport size Photographs
    • Identity proof such as Aadhar card, voter ID, passport, PAN card.

    Who can apply?

    • Address proof such as Aadhar card, voter ID utility bill passport ration card, or any other government-issued document
    • Identity proof such as Aadhar card, voter ID, passport, PAN card
    • Documents of the property the borrower wants to be mortgaged
    • Account statement of the last 6 months
    • Last three years audited financials

    FAQ's

    Typically, the processing time for an instant loan against property can range from 7 to 15 business days.

    Yes, you can avail a loan against property on a joint property. Both co-owners need to be involved in the application process and must meet the eligibility criteria.

    Most financial firms offer loans against property to NRIs who meet the eligibility criteria.

    A home loan against property and a home equity loan both leverage real estate. However, they differ in loan structure, interest rates, and loan usage.

    Absolutely. You can continue using the property (whether residential or commercial) even after pledging it as collateral.

    The loan amount is directly tied to the current market value of your property. Additionally, factors like location, condition, and demand can significantly impact the valuation.

    Common charges include processing fees, administrative fees, legal fees for property evaluation, and stamp duty.

    Yes, it is possible to take a loan against property even if it has an existing mortgage. This process is called a top-up loan, but the combined loan amount (existing mortgage + new loan) must not exceed the lender’s loan-to-value (LTV) ratio.

    If your property’s market value appreciates significantly during the loan tenure, you can approach your lender for a top-up loan or renegotiate your loan terms for a better interest rate or higher loan amount.

    Yes, you can, as long as the ownership is legally transferred to your name. Lenders will require all legal documents to verify ownership before sanctioning the loan.

    While insurance is not always mandatory, lenders may recommend taking insurance to cover both the property and your life. This ensures that, in case of unforeseen circumstances, the outstanding loan amount is covered.

    If you wish to sell the property while it’s mortgaged, you must first repay the outstanding loan amount. The lender will release the property’s title deed once the loan is fully settled, allowing you to proceed with the sale.

    Borrowers often have room to negotiate their loan against property interest rates and terms. Lenders may offer preferential terms based on your credit history, income level, and the property’s value.

    Got more queries? Our team of experts is here to guide you through every step, ensuring you get the best terms on your loan against property. With years of experience, we know how to navigate the fine print, avoid common pitfalls, and secure a deal that truly works for you.

    Whether you’re looking to expand your business, invest, or simply free up capital, we’ll make sure the process is smooth, hassle-free, and tailored to your needs. Reach out today to explore how we can help you make the most of your property.  

    LAP as we call it is a secured loan against residential or commercial property. These loans are usually offered at a lower interest rate as compared to a personal loan or business loan. Banks, housing finance companies and NBFCs are the major providers for loans against property.

    Flats, common apartment, residential house or any other self-occupied residential property

    Office buildings, malls, shops, complexes, and other constructed commercial property

    No, it’s important to insure the property to be used as collateral. Moreover, the insurance cover has to provide protection against calamity and fire-caused damages.

    Borrowers can get up to 55% off the commercial properties market value and 60% of the residential properties market value. But it is advisable to speak to a customer representative since conditions are applied.

    The repayment period usually commences the very next month after the loan disbursal month. However, you should speak to the customer care representative for full details.

    The loan eligibility is calculated based on the borrower’s repayment capacity. That depends on factors like age qualification income, co-applicant’s income, and others.

    No, borrowers do not get any tax deduction for a LAP. As per regulations, GST will also be charged as applicable.

    You can apply for a joint loan with another earning co-applicant for increased eligibility and loan amount High LTV on the market value of both residential and commercial properties Transparent and convenient process promising maximum speed and great customer support Personalized and tailor-made according to your individual needs

    Serves as an option for multi-purpose usages such as business expansion, child education, personal expenses like vacations or weddings, or a medical emergency

    Lower interest rates compared with personal or other types of loans.

    Offers tax benefit under section 37 (1) of the income tax act 1961

    Ensures maximum utilization of property by allowing borrowers to avail loans up to 50-70% of the value of the property

    Ownership of your property remains with the borrower

    Quick approval process
    Prompt disbursement

    Easier process for foreclosure.

    The loan amount is typically based on the loan against property interest rate and the property’s market value. Lenders usually offer 50%-70% of the property’s assessed value.

    Yes, you can use the loan for a variety of purposes, including overseas investments. However, ensure that the loan terms and conditions permit this usage.

    If the property value decreases significantly, it may affect the possibility of refinancing or extending the loan. Regular monitoring of property values can help manage this risk.

    Yes, it is possible to transfer your loan against property to another lender. This is often done to benefit from better terms or interest rates.