Loans Against Property

What is Loans Against Property (LAP)?

Lap was essentially a domain of foreign and private banks. They offered the product to fund their self-employed customers' 

business-related needs. Lately, all banks are offering this product including the public sector banks.

Now, with Loan Against Property, you can leverage your property's equity to expand your business, meet your working 

capital requirements or fulfill any other personal or professional needs. Usually, loans are granted up to 60%-70% of the 

property value.

Before taking the loan, the borrower needs to sign a declaration stating the end-use of fund.

Who can opt  for LAP?

Individuals (Salaried or self-employed) who have a property and who can fulfill the following requirements  

•  Income

•  Age (Min. 21 Years and Max. 50 to 70 years- depends on the lender)

•  Property Valuation

•  Existing Liabilities (if any)

•  Current Work Experience

•  Financial Documents

•  Number of Dependents

What is the process involved ?

The process is pretty much similar to the home loan process.

• Application
• Processing
• Documentation
• Verification/Valuation
• Sanctioning of the Loan
• Disbursement

What are the documents required?

For Salaried:

1. Application form with photograph
2. Photo Identity and Address Proof
3. Latest Salary Slips
4. Form 16
5. Bank Statements (Last 6 months)
6. Processing fee cheque

For Self-Employed:

1. Application form with photograph
2. Photo Identity and Address Proof
3. Proof of business existence & Education Qualifications.
4. Last 3 years ITR
5. Last 3 years P&L and Balance Sheet
6. Bank Statements (Last 6 months)
7. Processing fee cheque

When can you go for this option ?

• To meet the credit needs of trade, commercial activity, other general business/profession, as also for their bona fide requirements.
• To meet educational expenses of family members including near relatives
• To undertake repairs/renovation/extension to the residential/commercial property.

• To purchase / construct residential house/flat, purchase of plot of land for construction of house/ premises for business/commercial use.
• For Repayment of existing loans availed from other Banks / FI’s conforming to the extant guidelines regarding  “takeover” of account.

What you should know about tax benefits for LAP?

•  There are no tax incentives while paying the EMIs, unlike in the case of home loans. However, this is only in the case of a salaried person.

• A businessman can claim tax deduction on the entire interest amount paid on the loan if he can prove that the loan was genuinely used to improve his business. This tax advantage is also available if the businessman takes a loan against gold or shares/securities that he owns. The interest rate for a loan against shares or securities, such as the PPF and NSC, varies from 12-15%, while that for gold ranges between 14% and 25%. In the case of the former, a lender will be willing to offer a loan that is 40-60% of the value of the securities, while for a gold loan, you will be able to get 50-70% of the value of the gold you pledge.

• If you are already under a home loan and need money for children's education or marriage, top-up loan is the best                      option though the interest rate is a little high. But if you are not under a home loan and have an own house, then Lap is the best when compared to personal loan. Because, the interest is lesser (similar to home loan), longer tenure, less or no processing fees.

• If you default, the bank will sell the pledged shares or gold to recover its dues, which is a smaller loss than losing your home. However, if you need a large amount of money that runs into lakhs, the only viable valuable asset that you may be able to pledge is your house.

Different Banks Interest Rates for Loan Against Property: (As on 4th September 2015)

Banks	up to 30 lacs	30-75 lacs	75 & above	Processing fees
HDFC	12.75%	12.75%	12.75%	1%+ service Tax
Ing vysya	12% to 13%	12% to 13%	12% to 13%	1%
ICICI Bank	12.05%	12.05%	12.05%	1% + service tax
Axis Bank	13.15%	13.15%	13.15%	1%
SBI	12.60%	12.60%	12.60% (Upto 1 Cr) else 12.85%	1%
PNB HFL	12.25% - 13.00%	12.25% - 13.00%	12.25% - 13.00%	1%
FedBank	13%	13%	13%	1% + service tax
India Bulls	12.50%	12.50%	12.50%	1%+service Tax
DCB	13.50%	13.50%	13.50%	1% + service Tax or Min 5000/-
Standard Chartered	11.75%	11.75%	11.75%	1%+ service tax
Citibank	11.5% (Fixed for 2yrs)	11.5% (Fixed for 2yrs)	11.5% (Fixed for 2yrs)	0.50%
IDBI Bank	11.50%	11.50%	11.50%	10000 + service tax
Deutsche Bank	11.75% to 13%	11.75% to 13%	11.75% to 13%	1% + service tax
Cent Bank	14.25	N.A	N.A	1% of the loan amount
HSBC	11.20% - 11.70%	11.20% - 11.70%	11.20% - 11.70%	0.50%
DHFL	13.75%	13.75%	13.75%	1.5% + Taxes.
LIC HFL	12.50%	12.50%	12.50%	0.50% + service tax
Fullerton	15.5%	15.5%	15.5%	1% of the loan amount
Reliance	13.50%	13.50%	13.50%	1%
Edelweiss	13.25%	13.25%	13.25%	1% of the loan amount
Bank of India	11.70%	11.70%	11.70%	1% of the loan amount Max. Rs.50000
Tata capital	12.50% - 13%	12.50% - 13%	12.50% - 13% (Upto 1Cr) then 13% - 13.50%	1% + service tax
Magma housing finance	14% - 14.50%	14.50 %	14.50 %	1.25% + service tax
Kotak	12.5% to 13%	12.5% to 13%	12.5% to 13%	1%
Chola Mandalam	13.75%	13.75%	13.75%	1.5%
HDBFS	13.75%	13.75%	13.75%	1%
Bajaj Finserv	13.50%	13.50%	13.50%	1.50%

Disclaimer : This site does not take any responsibility for any sudden / uninformed changes in interest rates.