Loan Against Property (LAP) allows individuals or businesses to borrow money by using their residential or commercial property as collateral. Here's how it typically works:

1. Property Valuation

   • The borrower offers their property (residential or commercial) as security for the loan. The lender evaluates the property to determine its market value.

2. Loan Amount

   • Based on the property value, the lender offers a loan amount, typically up to 60-80% of the property’s market value. The loan amount depends on factors like property type, location, and the borrower’s financial profile.

3. Interest Rate

   • Interest rates on LAP are generally lower than unsecured loans, as the property serves as collateral. Rates can be fixed or floating, depending on the lender and loan agreement.

4. Repayment Terms

   • LAP offers flexible repayment options, such as monthly EMIs (Equated Monthly Installments), with tenures ranging from 5 to 20 years, depending on the loan amount and borrower’s capacity.

5. Use of Funds

   • The loan can be used for various purposes, including personal expenses, business expansion, medical bills, education, or debt consolidation.

6. Risk of Default

   • If the borrower fails to repay the loan, the lender can seize the property to recover the outstanding dues.

7. Processing and Documentation

   • The borrower submits documents related to the property (ownership proof, valuation report, etc.) and their financial status. The lender processes the loan application and sanctions the loan based on approval.

In essence, LAP allows borrowers to unlock the value of their property for immediate financial needs while maintaining ownership, with the risk of losing the property if repayment obligations are not met.

To qualify for a Loan Against Property (LAP), the following general eligibility criteria typically apply:

1. Age Criteria

   • Minimum age: 21 years.

   • Maximum age: 65 years (at the time of loan maturity).

2. Property Type

   • The property offered as collateral must be either residential, commercial, or industrial property. The property should be legally clear and free of any encumbrances or disputes.

3. Property Ownership

   • The applicant must be the legal owner of the property, either individually or jointly with others. The ownership documents will be required for verification.

4. Income Requirements

   • The borrower must have a stable and sufficient income to repay the loan. Income can be from business, salary, or other reliable sources.

   • Self-employed professionals or business owners may need to show income proof such as tax returns or audited financial statements.

5. Credit Score

   • A good credit score (typically 650 or above) is important to demonstrate the borrower’s creditworthiness. However, LAP may be available to individuals with a lower score, depending on other factors like property value.

6. Property Valuation

   • The property should have a clear market value that can be evaluated by the lender. Typically, lenders offer up to 60-80% of the property’s market value as the loan amount.

7. Occupation

   • Both salaried and self-employed individuals can apply for LAP, but self-employed applicants may need to provide additional documentation such as business financials or tax returns.

8. Residency

   • The applicant must be a resident of India.

9. Existing Liabilities

   • The borrower’s debt-to-income ratio should be within acceptable limits, ensuring the borrower can manage additional financial obligations.