Loan Against Property

Features & Benefits of a Loan Against Property

• Easy to get: LAP is a secured loan, making it easier for lenders to offer money to the borrower as it is backed by collateral.
• Longer tenure: Usually, banks sanction a LAP between Rs. 3 Lakhs to Rs. 100 Crores. It allows repayment of up to 20 years.
• Lower interest rate: In comparison to Personal Loans, a LAP has a lower rate of interest due to the collateral security.
• Lower EMI: With a longer tenure and lower interest rate, EMIs are more affordable.
• Flexibility: Various banks offer flexible products — term loans, overdraft facilities, and reverse mortgages.
• Types: Loan against residential/commercial property, loan against rent receivables, reverse mortgage, etc.
• Tax benefits: You can get tax benefits if the LAP is used for home renovation, subject to proof of end use.

Loan Against Property Eligibility

• Age: Minimum 21 years and maximum 65 years.
• Profession: Both salaried and self-employed individuals with regular income are eligible.
• Joint applications: Co-applicants allowed; their income can be considered for eligibility.
• Ownership:
  • Applicant must own unencumbered property — residential, commercial, or industrial.
  • Agricultural land is not accepted as collateral.
  • Property should be vacant or self-occupied in most cases.
  • Some banks don’t accept rented or leased properties.
  • Loans against vacant residential plots are also allowed by some lenders.
• Margin: Usually 10% to 50% of the property’s market value.
• Current obligations: Take-home pay should be at least 50% after all EMIs, including the new LAP.
• Credit history: CIBIL score of 600+ preferred.

Mortgage Loan Interest Rate & Charges

• Upfront fees: Non-refundable, usually ₹3,000 – ₹5,000.
• Processing fees: 0.50% – 1.00% of loan amount.
• Valuation charges: Sometimes charged separately for property valuation.
• Legal scrutiny charges: May be included in or separate from processing fees for legal verification.
• Mortgage registration charges: In some states like Tamil Nadu — 0.5% of loan amount (max ₹25,000 stamp duty + ₹5,100 registration).
• Prepayment charges: 2%–5% of outstanding loan (varies by bank).
• Insurance: Property insurance mandatory; optional loan/health/personal insurance may be offered.

Loan Against Property Interest Rates of Banks & NBFCs 2025

Loan Against Property Process

• Visit the lender’s official website and fill out the online loan application form.
• Choose the offer that best suits your requirement after form submission.
• The lender verifies KYC and income proof documents.
• Property inspection and personal discussion are conducted by the lender.
• Legal search is carried out by bank advocates to ensure clear title of the property.
• Property valuation and eligibility assessment follow.
• Once approved, the bank issues a sanction letter with detailed terms and conditions.
• Execute and register the equitable mortgage if applicable.
• Disbursement process is completed post-documentation.

Types of Loan Against Property

• Business Expansion Loans: For machinery purchase, working capital, or new investments. LTV varies — Residential: 65–70%, Commercial: 55–65%, Industrial: 40–55%.
• Working Capital Overdraft Facility: Overdrafts sanctioned against property to meet daily business needs, based on property value and projected turnover.
• Personal Expenses: For medical, educational, marriage, travel, or consumer purchase purposes.
• Home Renovation: Used for home repairs or improvements when other renovation loans are not suitable.
• Lease Rental Discounting: Loans against future rent receivables — banks finance 75%–90% of receivables, tenure ends before lease expiry.

Mortgage Loan EMI Calculator

• You can use the Shahcommunication EMI Calculator to calculate your Loan Against Property EMI.
• Enter the required loan details to get the EMI result instantly.
• The calculator also provides a detailed breakup of principal and interest repayment across the loan tenure.

Documents Required for Mortgage Loan

Prepayment of Loan Against Property

• You can prepay your Loan Against Property before the end of the tenure.
• As per RBI rules, no prepayment charges apply for floating-rate mortgage loans.
• Fixed-rate variants may attract 2%–5% of outstanding loan as prepayment charges, depending on the lender.

Why Apply for a Loan Against Property with Shahcommunication?

• The lowest rate of interest: Compare multiple banks on one platform and choose the lowest rate available.
• Lowest processing fees: Typically 0.50%–1% of loan amount — helps save significantly on high-value loans.
• Easy documentation: Shahcommunication’s credit team assists with completing documentation formalities.
• Higher Loan-to-Value Ratio (LTV): Compare various bank LTV ratios to choose the best fit.
• Prepayment clauses: Shahcommunication helps compare hidden prepayment charges (2%–5%) across banks.
• Transaction charges: Includes advocate fee, valuation fee, and mortgage registration costs — helps identify banks with inclusive processing fees.

Additional Support & Expertise

• Get expert assessment of your demographic and financial profile.
• Review of your previous repayment record for better eligibility.
• Guidance on banking terms such as Legal Scrutiny Report (LSR) and other compliance requirements.
• Assistance in understanding fine print and hidden loan conditions before approval.