List Of Factors You Must Know Before You Apply For LAP

Financial Problems often come uninvited, which could ruin your plans. Few of us consider such situations and save funds, which could rescue them in such an unwanted scenario. But most of us don’t have those savings, and so you may have to turn yours toward the least favourite option that is to borrow money either from relatives or from any financial institutions. Though if you require a huge amount of money instantly, then opting for a loan against property is the best option as the LAP interest rates are much lower.

As you know that getting personal loans means paying a high rate of interest. So applying for a loan against property is the best option for you. It is a secure mortgage loan option which provides a huge sum of money against your pledged property. However, LAP is very different from general house loans in many aspects. But they are the best and cheapest alternative of personal loans.

How Does LAP Differ From Home Loan?

Most of the borrowers get confused between LAP and home loan. Though both of them sound similar, they differ in features and are good for saving you in a big financial crisis. Some of the difference between LAP and home loans are as follows –

Total Amount Of Loan

One of the biggest investments in a person’s life is purchasing their own house. The dream house could cost you much more than what you have imagined. In such cases, a home loan is better as it offers a loan equal to 90% of the property’s value. At the same time, the loan against property offers you only 60-70% loan value of the property.


Purpose Of The Loan

Home loan can only be utilised for constructing the house or for purchasing a new house. But the loan against property could be used in various purposes like medical emergencies, educational funds or for improving your business.

Top-Up Benefits

Almost all the LAP offer the option of top-up benefits. It provides you with an option to get more funds along with the present loan. These features of loan against property provide flexibility in terms of money and help you to get through different types of financial crisis. But these features are exclusively available only on loan against property and not available on the home loan.

Few Things That You Should Consider While Applying For Loan Against Property


During the immediate requirement of huge financial help, the best options are to apply for LAP. In this type of loans, the lender provides money against your residential or commercial property. Another reason why you choose LAP over a personal loan is the LAP interest rate which is much lower compared to a personal loan. The LAP interest rate can vary between 12 % to 15% in different banking institutions. But you must remember to check a few things before applying for Loan Against Property which includes –

LAP Interest Rates

The LAP interest rate depends on various factors like monthly income, the total value of the loan, loan tenure, credit scores, etc. So it is crucial to ensure while applying for LAP, that getting an appropriate value against the property. It is also important to choose the most affordable offer with the lowest rate of interest. To get the best offer you have to spend a few hours researching various offers provided by different financial institutions.

Total Amount Of Loan You Require

In case of loan against property, the total value of the loan is related to the current market price of the pledged property. Most provide loans which are equal to 40%to 80% of the market price of the property. If you can get the best loan offer, it will be beneficial to do proper research on various financial institutions and choose an institution that offers maximum value against your property.


Repayment Period

Generally, each bank offers a flexible and long Repayment period up to 15 years. The cost of monthly EMIs is inversely related to the repayment period of the loan. So, a longer repayment period means you need a lesser amount of EMIs each, while a shorter tenure requires you pay larger EMIs each month. Most people prefer a shorter repayment period as it helps to avoid increasing the cost of borrowing.

Availability Of Tax Benefits

Another crucial factor that you must keep in mind is, there are tax benefits available on Loan Against Property. Along with the EMIs, you need to pay tax each month.

Though applying for LAP is much quicker and easier compared to other loans. But you must do proper research about the institution before applying for a loan against property.

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