Loans Against Property
Have a Home, Office, Shop, Showroom? Need to raise urgent Capital to support your growing Business? Loans against Property is the easiest option that allows you to raise Funds repayable over 10 years or more. Your Property remains in your custody and you don’t lose out on future appreciation of your Property Value.
Typically these loans are used to start or expand business or to renovate your house. But it can also be used to repay existing high rate loans.
Features of LAP
- The maximum loan amount varies from bank to bank. It could range from Rs.2 lacs up to Rs.100 lacs. The exact amount depends on your property valuation, income and of course repayment capacity.
- The rate of interest is usually higher by 150-250 bps than Prevailing Rate of Interests on Home Loans.
- The maximum loan amount can come upto 50% of property value for commercial setups and up to 60% for residential properties.
- The maximum loan tenure is 15 years.
- Most banks do not accept properties that are on long lease or that are based on power of attorney. Built Up Property is a Must. LAP Is generally not given against Plot of land.
- The maximum age limit of eligibility is 60 years.
- You can choose either Fixed or Floating rate of interest. You also have an option of changing from Fixed to Floating interest rates and vice versa once every year.
- A processing fee is usually up to 1.50% of the loan amount and is payable upfront. This fee however will be deducted from the disbursal amount payable to you.
- You pay your loan in EMIs through post-dated cheques or through ECS to debit your Bank account through ECS with the EMI amount.
- You can also prepay the entire loan outstanding anytime after 180 days of availing the loan. Pre-payment charges will be levied accordingly. If you intend to do so, please ask for the pre-payment amount to be waived or a reduction in the penalty charges.
- You can also increase or enhance your loan loan against property eligibility. This Facility is called Top Up, and sanctioned after satisfactory seasoning of at least 12-18 months.
Loans Against Rentals Discounting (LRD)
Loans against Rental Discounting (LRD) is popular variation of LAP. In case of LRD, Banks discount lease rental income arising out of a Property which has been leased/ rented out to some reputed Corporate/Bank/MNC etc. It is a self liquidating kind of Loan in nature as the monthly repayment obligations are equated with rent receivables.
Features of LRD
- LRD is generally sanctioned by Banks for period of 7-10 years, but up to tenor of lease agreement. Sometimes Banks may offer Loans with tenor beyond the period of lease, only if the Lessee offers some comfort to enhance the lease period on expiration of original lease agreement.
- Your Property should be occupied by a Reputed Corporate, Bank, Limited Company etc. It means the lessee or occupant should be capable enough of paying you rent on monthly basis.
- Loan Amount is generally restricted to 60-65% of Market Value of Property under lease.
- There is no cap on the maximum amount of loan that can be lent under this product.