Important Questions About Loans Against Property Answered

Loan against property Or mortgage loan is a loan that comes under secured loans category wherein the borrower gives a guarantee to the loan lender by using his property as a collateral security. Under this arrangement, the right of ownership of the property remains with the borrower itself, and if the person is unable to repay the loan amount, can sell the property to pay off the due debts. Typically these types of loans are used to start or expand a business or to renovate your home. These loans can be availed by both salaried as well as self-employed professional employees.

What is a Loan Against Property?

Loan Against Property is a loan available to both salaried as well as self-employed to help them fulfill their business and personal needs by mortgaging their property as a collateral security with the lender. The documentation requirements for each may differ based on the application and their end use. Various types of properties such as commercial, residential, industrial and vacant land are eligible for seeking a mortgage loan. The loan is granted against the mortgage of the these mentioned property. The borrower is required to declare the end use of the loan taken against property in its application form.

Are any tax exemptions available to people taking LAP loans?

LAP is not eligible for any deductions or tax benefits. However, the availability of tax benefits will depend on the ultimate use of the money borrowed. In another case, you may continue to claim the available tax exemptions if you have an existing home loan on the same property against which you have taken a LAP.

What documents are required to apply for availing loan against property?

The following documents are required while applying for Loan Against Property along with the application:

For Salaried Individuals:

A copy of any of the following as Residence Proof:

Aadhaar card/Ration Card/Telephone Bill/Electricity Bill/Voter’s ID Card

A copy of any of the following as Identity Proof:

Aadhaar card/Voter’s ID Card/Driver’s License/Employer’s Card

◦ Latest 6 months Bank Statement/Passbook showing a salary/income credited in the account.

◦ Previous 6 months salary slip showing all deductions

◦ Form 16

◦ Copies of all the property documents of the concerned property

For Self Employed Professionals/Individuals:

◦ Previous 3 years Financial Statement

◦ A copy of any of the following as proof of residence:

Aadhaar card/Ration Card/Telephone Bill/Electricity Bill/Voter’s ID Card

◦ A copy of any of the following as proof of identity:

Aadhaar card/Voter’s ID Card/Driver’s License/Employer’s Card

◦ Latest 6 months Bank Statement/Passbook showing a salary/income credited in the account.

◦ Copies of all the property documents of the concerned property

Can there be a co-applicant for a loan against property? If yes, who can be co-applicant?

Yes, You can include your spouse or your parents as a co-applicant that will help you to increase your loan eligibility and the amount being lent as the income of the person added as co-applicant also gets added.

What processing fee is charged for such a loan?

Processing fee for a loan against property differs from bank to bank and it generally ranges in between 0.50 percent -1 percent. Sometimes the bank also offers NIL processing charges on LAP.

Many of the self-employed or salaried individuals prefer to take this loan as compared to any other loan options. As availing these loans is very easier nowadays. Moreover, the availability of longer tenure at a low-interest rate has made this mortgage loan a preferred choice. You may consider opting for this loan when you are in quick need of funds by keeping your property as security.

Additional Details:- Things to Consider while Getting a Loan against your Commercial Property

This article will help you to know about the details of LAP and the basics about it.