A "low interest" loan shouldn't mean you have very little interest in paying it back!
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    We found 38 Loan Against Property
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    Interest Rate Range
    Processing Fee Range
    Loan Amount
    Tenure Range
    9.0% - 9.50% Floating
    Up to 0.50% (min. ₹10,000 + GST) One time fee
    8L Min
    1-30 Years
    Response Time : Within 30 minutes
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    8.80%- 9.20% Floating
    12,000 (inclusive of GST) One-Time Fee
    20L - 5Crs
    1-30 Years
    Response Time : Within 30 minutes
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    8.95% - 9.15% Floating
    10000+GST One time fee
    -
    1-20 Years
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    8.70% - 9.00% Floating
    Up to 0.5% (max. ₹11,800) One time fee
    5L - 10Crs
    1-30 Years
    Response Time : Within 30 minutes
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    8.75% - 11.0% Floating
    Up to 0.5% One time fee
    2L - 3Crs
    1-30 Years
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    8.90% - 9.50% Floating
    0.50% PF (For Salaried) to 1%(min.3000)+Tax (for Self employed)
    12L - 5Crs
    1-20 Years (10 yrs plot loan)
    Response Time : Within 30 minutes
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    8.80% - 11.75% Fixed/Floating
    0.50% (min. ₹10,000) One time fee
    5L - 10Crs
    1-30 Years
    Response Time : Within 30 minutes
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    9% Floating
    ₹ 10000+ taxes One time fee
    50L - 5Crs
    1 - 25 Years
    Response Time : Within 30 minutes
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    8.55% - 8.99% Floating
    ₹5,000 to ₹10,000 + applicable tax One time fee
    20L - 10Crs
    1-30 Years
    Response Time : Within 30 minutes
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    9.25% Floating
    0.50% (min. ₹10,000)
    1Cr - 5Crs
    1-20 Years
    Response Time : Within 30 minutes
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    9.25% - 11.20% FIXED
    Up to 0.5% One time fee
    2L - 3Crs
    1-30 Years
    Response Time : Within 30 minutes
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    8.70% - 10.95% Floating
    Up to 0.5% One time fee
    2L - 3Crs
    1-30 Years
    Response Time : Within 30 minutes
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    LAP or loan against property has recently become extremely popular form of longer term loans. It is highly appreciated by self employed people. This particular category of loan has shown substantial growth over the past years and is expected to grow even more in the coming years. There are several things that must be kept in mind while availing a loan against property.

    The rate of interest associated with a loan against property is lower than that associated with personal loans as the Lapps are secured against the borrower’s property or house. The rate of interest ranges between 11.5% and 15% per annum. On the other hand, the tenure ranges between 1 year and 9 years. However, the tenure can be extended up to a period of 16 years, whereas personal loans come with a maximum tenure of 5 years. The bank or the lender offering the loan checks your obligations associated with debt servicing, income, and the credit score before sanctioning the loan. Loan against properties are offered on freehold property. The owner should have clear title to the property.

    In order to bring down the risk factor, several banks provide loans ranging between 50% and 65% of the property value. Some of the NBFCs (Non-banking Financial Companies) offer 75% of the property value as loan. The processing fee for this loan ranges between 0.5% and 1.5%. Loans are sanctioned only after the self employed applicant shows his/her track record for earning for the past 3 years. This is usually done by submitting IT returns.

    Objective Of Loan Against Property:

    The objectives of LAPs or loan against properties are mentioned below:

    • Addressing both long-term and short-term requirements of the home loan seekers who have self-owned commercial property or residential property.
    • Offering financial assistance in order to cover a different range of needs like a child’s education, expansion of business, medical exigencies, etc.

    Applicants and co-applicants of loan against property:

    • The co-owners of the purchased property must be co-applicants.
    • Partnership firms, sole proprietors, individuals, limited organizations are all registered under the Society Acts.
    • The age of a salaried applicant can range between 22 years and 65 years.
    • In case of self-employed people, the age can range between 25 years and 65 years.

    Properties not funded for loan against property (LAP):

    • Empty plot
    • Cooperative society property
    • Industrial sheds, warehouse or cold storage, cinema halls
    • Agricultural building or land
    • Under construction property

    Norms associated with property for loan against property:

    • Insurance of the property is mandatory.
    • Properties should meet minimum area criteria stipulated by the banks. This is different commercial properties and residential properties.
    • There are specific norms that govern the minimum market value of properties built in non-metro cities and metro-cities.
    • Market valuation for LAP property is carried out as per the technical report of valuator.

    How Much Loan Can Be Availed:

    In order to calculate the borrower’s eligibility towards the loan, the bank or the lender will specifically consider a certain percentage of the property’s market value and the borrower’s capacity of repayment. Typically, non-banking financial companies and banks offer only a certain percentage of the property as loan. This value ranges between 50% and 65%. The lender also considers the repayment capability of the borrower considering your economic stature. Also, there is an age limit associated with the loan. For a salaried applicant, the maximum age at which he/she can avail loan against property stands at 60 years. For a self employed applicant, the maximum age at which he/she can avail loan against property stands at 70 years.

    Tenor And Rate Of Interest:

    As loan against property or LAPs are secured loans, they are cheaper than the personal loans. In case of personal loans, the rates of interest range between 12.5% and 21% per annum. This greatly depends on the salary you draw, the company you work with, etc. The tenor or LAPs can range between 10 years and 15 years. You may either choose an overdraft facility or go for a lumsum.

    Penalty Charges And Processing Fees:

    In general, the processing fee for this particular type of loan stands between 0.50% and 3%. The processing fee is deducted from the sanctioned loan amount. Some of the lenders can charge you up to 2% pre-payment penalty if you choose to clear the loan before the end of the tenure. As per the state laws, statutory charges and stamp charges are also applicable. In case of delayed payment of the EMIs (Equated Monthly Instalments), you may have to pay a penalty charged by the lender. This particular penalty varies from one lender to another. Usually the penalty interest stands at 2% to 3% of the overdue instalment per month.

    What Documents Required For Loan Against Property :

    For Salaried Individuals

    For Self Employed Individuals
    • Proof of identity
    • Proof of residence
    • Recent salary slips
    • Form 16
    • Bank statements for the past 6 months
    • Proof of identity
    • Proof of residence
    • IT returns
    • Profit/loss balance sheet for the last 3 years of your business

    Advantages Of Loan Against Property:

    • Loan against property allows the owners of the properties to monetize the idol asset that they have.
    • Loans can be availed against both property that is leased out and self-occupied property.
    • The tenure of a loan against property is longer than that of a personal loan. Generally, personal loans offer a maximum loan amount of Rs.10 lakh. You can avail a loan more with loan against property.

    Disadvantages Of Loan Against Property:

    • In case you default on the repayment of the loan, you could end up losing your property to the lender.
    • Unlike a housing loan, no tax benefit can be availed by the borrower on the interest and the principal amount paid.

    Bottom Line:

    Before you opt for a loan, analyze and assess your repayment capability. Often people opt for loan against property as they are cheaper than personal loans and then use that money in risky avenues. Most of them fail to repay the debt and end up losing their property. Ensure that you are completely capable of repaying the loan and use the amount for something that you really need. 

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