A Guide For Loan Against Property


Property is one of the most important assets, and individuals or organisations can not only use it for the living and business activities but also for fulfilling the financial requirement by pledging the property to the bank or financial institution. The debt instrument under which the property is mortgaged for a certain amount is known as Loan against property. It can be availed against the residential as well as the commercial property.

Reasons for Loan against property

A. For Individuals

1. It assists in facing unpredictable circumstances like financial setbacks or medical emergencies.

2. LAP can be used for meeting wedding expenses or financing the tour.

3. It fulfils the need of owning a vehicle.

B. For Business

1. To make a Startup idea work finance is needed. As most of the time, the amount associated is too high, the entrepreneur looks for finance to realise their dream. LAP helps in meeting that requirement

2. The company have to expand themselves, introduce new lines of product or continuously look for the opportunity to exist in the cut-throat competition, LAP helps in financing the needs of existing business

3. It also helps meeting the financial requirement for hiring employees, meeting inventory and updating the technology.

Loan against property becomes a lucrative choice because the chance of getting an approval on this debt instrument is higher. It is because financial institutions have collateral as security in case the borrower fails to repay the Loan.

Types of property against which Loan against property can be availed

1. Self-owned land

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2. Self-owned property

3. Self-owned rented property

4. Self-owned commercial property

5.Self-owned rented commercial property

Tenure and interest rate of Loan against property

The tenure for LAP ranges between 10 to 15 years while the interest rate is between 12 % to 15%

Eligibility for Loan against property

Eligibility of customers is determined by the income of the applicant and market value of the Loan against property.

 To apply for the Loan against property:

1. Individual must be the resident of India

2. He must be more than 21 years old and less than 70 years old.

3. Banks also fix the minimum salary requirement of the individual. It varies from bank to bank.

Documents required

Documents required for applying the LAP are as follow differs for an individual who is a salaried individual to a person who is self-employed, mainly the documents asked are:

1. Identity proof

 Aadhaar card, PAN Card, Voter’s ID, Passport, Driving license etc.

2. Proof of Residence

 Aadhaar Card, Electricity Bill, Ration’s Card, Passport, Driving License etc.

3. Proof of Income

 Bank statements of the last two years

4. Financial Documents

Income Tax filings, Profit and loss accounts, Balance sheet status

5. Proof of business continuation

6. Last three years audited financials.


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