A Loan Against Property (LAP), also known as a mortgage loan, is a type of secured loan where borrowers pledge their residential or commercial property as collateral to avail funds from financial institutions. Here are the key aspects and features of a Loan Against Property
The property (residential or commercial) owned by the borrower is pledged as collateral to secure the loan. The property remains mortgaged until the loan is fully repaid.
The loan amount sanctioned is generally a percentage of the property's current market value, known as Loan-to-Value (LTV) ratio. Lenders typically offer loans up to 60-70% of the property's value.
Interest rates can be fixed (constant throughout the loan tenure) or floating (linked to market rates like MCLR or Repo Rate). Rates are influenced by market conditions, borrower's creditworthiness, and the property's value.
Loan Against Property offers longer repayment tenures compared to unsecured loans, typically ranging from 5 to 15 years. This allows borrowers to repay in manageable installments.
Applicants need to provide identity proof, address proof, income proof (salary slips, income tax returns), property documents (title deed, possession certificate), and bank statements.
Fees: Lenders may charge processing fees, administrative fees, legal fees, valuation fees, and foreclosure charges (if applicable).
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