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A loan against property is a loan given or disbursed against the mortgage of property. The loan is given as a certain percentage of the property’s market value, usually around 40 per cent to 60 per cent.
Loan against property belongs to the secured loan category where the borrower gives a guarantee by using his property as security.
As the name suggest, it is a kind of a loan that is against the security of one’s property and also known as Home Equity Loans. It is designed to meet the financial needs of a person who already owns a house, which is free from any encumbrance which means it is not given as security for any purpose.
Let us put this term into more simple words for you, a loan In other words it actually connotes a loan given or disbursed against the mortgage of property. One can now take a loan against one’s self occupied residential or commercial property, to expand his business, plan a dream wedding, or fund one’s child’s education and much more. However, one needs to give a declaration stating that these funds will not be used to carry out any illegal activities or for any speculative purpose.
Eligibility for LAP
The eligibility of a loan against property depends upon various factors including the following important ones:
1. Income of applicant
2. Credit health of applicant
3. Property type
4. Property value