Loan Against Property FAQs

You can avail up to 70% of the market value of the property subject to eligibility norms kept by the lenders.

It usually takes minimum of 3 to 4 working days after you have applied for LAP along with required documents.

You can pay either by any of the following ways:

  • Post dated cheques (PDCs)
  • Standing Instructions
  • Internet Banking
  • Electronic Clearing System (ECS)
  • Mobile Banking

Loan to Value (LTV) expresses the ratio of a loan to the market value of the asset mortgaged. The loan is often given in the range of 50% to 70% of the market value of the property.

Yes, you can get loan against commercial property.

Amortization Schedule gives the break-up of every EMI towards repayment interest and outstanding principal of your loan. It is a table showing the reduction of your loan amount by monthly instalments.

  • Income documents for Salaried Customers: Last 2 month's salary slip, 6 months bank statement, form 16 and ITR and documents related to running loans
  • Income documents for Self Employed customers: Complete set of ITR of last 2 years, financials for last 2 years, 6 months CA statement and documents related to running loans

Loan eligibility is based on your monthly income, value of the property, loan repayment history, credit score and other conditions as laid down by the lender.

You can mortgage self-occupied Residential, Commercial or industrial property as collateral for availing LAP.

The Loan against Property with overdraft facility is a variant of Loan againsr Property. Overdraft facility against property has been designed to cater to the requirement of the business houses with regard to their short-term working capital needs. Overdraft can be in the form of evergreen (fixed) or dropline (reducing).

Yes, upto 90% of the LAP can be offered as an overdraft to the borrower.

Yes, banks usually charge a non-refundable processing fee for every LAP application which can be upto 2% of the loan amount. The processing fee varies from blender to lender.

An EMI stands for Equated Monthly Instalment. It is a fixed amount which you pay every month towards your loan repayment. It is consisted of both principal as well as interest payment.

The EMI will be due on a fixed date every month. This fixed date for EMI will be informed to you when your loan amount is disbursed.

If loan is disbursement partly, monthly interest is payable only on the disbursed amount. This interest is called Pre EMI interest. You need to pay it on monthly basis only till the final disbursement is made, after which the EMIs will start.

Lease Rental Discounting (LRD) is a term loan extended against rental receipts derived from leased out commercial property. The loan is provided to the lesser based on lower of the discounted value of the future rentals and the underlying property value. It is given to the owners of residential and commercial properties, which are to be rented or already rented to MNCs / Banks/ reputed Public bodies, etc. Here, rents are considered to be payments that will be received in the future. So, the lenders deduct time value of money from these future payments and pay the balance to the lessor if lease rental discounting is availed.

You can avail Loan against Property for a tenure ranging from minimum 3 years to maximum 15 years. Here point needed to mention is that the tenure for the LAP could be restricted to the retirement age or 60 years at loan maturity for salaried customers and 65/ 70 years for non-salaried customers.

In case, you do not have required financial documented, then also there are various options available under which you can be offered loans i.e. income based and surrogate income based loans based on your income, credit score and your loan eligibility.

Yes. You can prepay or part pay the loan at any time after 6 months from the date of final disbursement of the loan and part payment or foreclosure charges will be applicable for the same depending upon when are you making prepayment and the outstanding loan amount.

You can foreclose your LAP account by making full repayment of your outstanding loan amount in your LAP account. After that you need to submit a written request for foreclosure of your LAP account to your lender. You can take the help of customer service desk of your lending bank to provide you with the necessary assistance.

LAP account foreclosure charges vary from lender to lender. Your lender might have informed about such charges at the time of extending the loan to you (might be mentioned in loan agreement). Some lenders do not charge any foreclosure fee and some charge upto 5% of your outstanding loan amount.

Repayment capacity means to make sure that you can comfortably repay the loan amount. It takes into consideration following factors:

  • Your Age
  • Your Income
  • Credit Score
  • Your Qualification
  • Number of dependants
  • Spouse's income
  • Assets & liabilities in your name
  • Stability of job
  • Continuity of occupation
  • Savings history

Tenure under LAP generally ranges from 5 years to 15 years. You have the option of selecting a tenure you are comfortable with provided the term does not extend beyond your reaching 65/ 70 years of age or retirement age, whichever is earlier.

Yes. You can add co-applicant for LAP. You can add your spouse as a co-applicant for the loan so that his / her income can enhance your loan amount. Other co-owners of the property could also need to be co-applicants.

The primary security for the loan is a first charge of the property to be financed. You need to deposit the title deeds and/ or such other collateral security as may be necessary.

Yes. Many lenders including private and public sector banks offer LAP to the NRIs.

EMI has 2 components which are interest and principal. Interest is calculated on daily reducing balance basis on the principal outstanding on the loan, the principal on which the interest is charged gets reduced every month.

Banks can specify dates of interest reset which will be linked to either the date of first disbursement or date of review of MCLR. The MCLR prevailing on the day the loan is disbursed will be applicable till the next reset date, irrespective of the changes in the benchmark in the mean time. The periodicity of reset is an important part of the loan contract. As per the RBI rules, the periodicity of reset shall be one year or lower.

You can request for and get an IT certificate that can be issued any time during the year.