5 Points to Consider For a Home Loan Against Your Property

A loan against property or LAP, also known as a secured loan, requires the borrower to have a financial asset of significant value to secure it with the bank to be used as collateral security in case the borrower defaults on the repayment of the loan.

Property loans can fulfil other expenses like wedding funds or as working capital for business purposes. 

Here are the essentials of these loans and what you should know before applying:


  • Verified and legal ownership documents
  • LAP loan interest rate is lower than a personal loan
  • Gather information about how much you will receive as a LAP loan amount
  • LAP loan can be approved even if you have an existing home loan
  • Put revenue-generating property as collateral in case of ownership of multiple properties
  1. Collateral Property Should Be Free From Disputes

The most fundamental rule is that whatever property you put up as collateral must be free from disputes. If there are any doubts about your ownership or dispute with anyone, it’s better not to apply for a home loan against property.

The lender will not accept your LAP loan application if you don’t have rights on your property or legal ownership documents.

  1. A LAP Loan Is Cheaper Than A Personal Loan

The significant benefit of applying for a LAP loan is that it’s cheaper than applying for a personal loan. The interest rate on personal loans is typically higher because they are riskier and more challenging to qualify for than other loans.

For example, it may be hard to prove your income or employment status if you’re self-employed; thus, getting an affordable personal loan will become harder.

If you are looking for a loan against property with the lowest interest rate, you can check out the websites of a few lenders. Usually, they have an online EMI calculator as well.

  1. Know How Much LAP Loan Amount You Will Get From   The Lender

It’s important to know exactly how much money you’ll be getting by putting your property as collateral. In some cases, lenders offer up to 70% of your property’s current market value.

However, the home loan against the property amount depends on your property location, credit score, repayment capacity, etc.

  1. You Can Apply For A LAP Even If You Have A Home Loan

A home loan or any other kind of lending is not an issue while you apply for LAP. 

For example, if you already have a home loan with Bank A and are thinking of applying for LAP with Bank B, it won’t be difficult. With banks constantly competing in terms of loan offers and requirements, there is no reason why one bank will not approve your LAP application.

The only thing that will matter is whether or not you meet their basic eligibility criteria and their minimum requirement, such as size/value of the property, pledged against LAP, property location, legal documentation of ownership, etc.

  1. Mortgaging The Leased Property Is The Best

There are instances when an applicant has multiple properties for residing and rental income purposes.

It is advisable to use the rental income generating property as collateral to secure a loan against property at the lowest interest rate and get the best deals on EMIs and loan amounts.

Summing Up

Although there are many reasons why getting a loan against your property might seem like an attractive idea, be sure you have thought about all the consequences before attempting it.

The right type of property or equity, knowledge of your legal rights, and careful budgeting will help you make smart financial decisions when considering getting a loan against your property. If you do decide that getting a loan against your property is right for you and everything is in order, take time to research lenders that can provide assistance.

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