The financial act of pawning one’s property against a sum of money encapsulated by a written agreement between the borrower and lender is called Loan Against Property. LAP follows a medieval principle of barter and pawning, a practice that has been at par since ancient times, way before paper money had been commercially used. Property, being a collateral form of investment, is used in this method of loaning. People can also make use of a Loan against property eligibility calculator for better results.
What is LAP?
The financial act of loaning a certain amount of money by mortgaging one’s land or property is called Loan Against Property. It is the most primitive method of loaning known to mankind. The process of LAP is quite simple. A lender will provide a sum to an individual who will be pawning their property to them. This borrowing sum will have to be bound by a return date. By the pre decided date, the borrower has to pay the sum plus some interest to the lender to get back their property. Nowadays, every bank provides an on-the-go LAP facility.
Properties eligible for LAP
You can avail a LAP against the following properties.
- Own residential property
- Own but rented residential property
- Owned and self-occupied residential property
- Own piece of land
- Own commercial property
- Own and rented commercial property
The amount of money an individual can ask for is based upon the real-time value of the property. Thus, if you want to apply for a LAP, you will have to provide all the necessary documents. The bank will send in representatives who will estimate the value of the property and only then can the bank agree to loan any amount.
Banks usually provide a maximum of 65% of the real-time value of the property as a loan.
Benefits of LAP
LAP offers various benefits, which make it an interesting pick for people who want a loan.
LAPs are easily available from any bank or financial institution. The only time-consuming part of the LAP is the estimation of property value. The rest of the process takes considerably less time and is not affected by anyone’s credit value. To get the benefits of a loan against property apply online on any bank’s official website.
Lower interest rates
LAP is a loan which levies a smaller percentage of interest rate on the loaned amount. The rates of Interest are always fixed and always affordable. LAP is normally accounted for a period of 15 years, which can be paid as a whole at the final date of the agreement or as EMIs.
Simple eligibility criteria
Eligibility criteria for LAP are very simple, for individual property owners, business owners and others. The criteria are basic and easy to meet. However, eligibility criteria may differ from person to person based on their financial background and occupation.
Safe and secure
LAP is one of the safest and most secure methods of loaning as every step of the process involves thorough revision of paperwork and background checking, eliminating any risks and fraudulence. LAP being levied on a collateral commodity does not account for any deposition charges.
Things one should keep in mind before applying for a LAP
There are a few things one should keep in mind before applying for LAP.
- Comparison between banks to find out the best possible establishment to apply for LAP is necessary the get the best deal.
- Pawning land is always a risky investment. Thus, borrowers must ensure returning the borrowed amount on the mentioned date of agreement completion to avoid any problems regarding one’s property.
- Credit score matters while getting confirmed for a LAP.
- It is always better to have an estimate of one’s property’s real-time net worth before applying for LAP.
Thus, LAP is a really interesting and effective method via which people can avail of a loan. So if you are thinking about a loan against property apply online today via any notable Bank’s online portal.