A Loan Against Property (LAP), as the name suggests, is a loan taken out by a borrower from a lender on existing residential or commercial property. It is a secured loan in which the borrower provides a guarantee against his/her own property. This means a secured loan is availed after pledging property as collateral.
The loan amount approved by the lender is based on a certain percentage of the property’s market value.
The interest rate starts from 8% p.a to 10.00% p.a.
You can avail of LAP up to 75% of property value for a maximum of 20 years.
Lower Interest Rate
Because the property is used as collateral for the loan, interest rates are generally lower than for personal loans.
Interest rates on real estate loans generally range from 7.5% p.a to 10.00% p.a. while for personal loans, interest rates range from 9.99% and above .
Longer tenure
As you can avail of LAP up to 75% of property value for a maximum of 20 years, it allows the borrower to repay the loan amount gradually without straining their cash flow.
Greater loan Amount
Borrowers can borrow more money for their property assets depending on their needs and asset valuation. The financial institution evaluates the property and applies the LTV ratio. (Usually in the range of 75-90%.)