The Concept of Loan Against Property and Their Types

LAP or Loan Against Property can be availed against a self-occupied commercial or residential building. It delivers an impressive range of benefits as well. A Loan Against Property is classified as a secured loan. Moreover, this type of loan is distributed against the guarantee or security of the legally owned property of the borrower.

While loan against property is not at par with the standard housing loans when you consider the aspect of competitive interest rates, still they turn out to be a cost-effective option than personal loans. Before you read ahead, learn some more differences between home loan and loan against property with our informative guide.

Property Types for Loan Against Property

The security in the LAP or Loan Against Property is the property owned by an individual who is applying for the LAP. The property’s value will decide the amount of prospective loan sanctioned.

Some of the common types of properties against which LAP can be availed are:

Residential Property:

Types of residential properties for which Loan Against Property can be sanctioned are apartments, villas, buildings, or even a plot of land, either vacant, rental, or self-occupied.

Commercial Property:

Types of commercial properties for which Loan Against Property can be sanctioned are schools, offices, gyms, warehouses, retail stores, medical centers, and so on. The title of the commercial property should be clear and there should not be any dispute on the overall ownership.

Co-owned Property:

It is the property that is owned by more than a single individual. In this case, the other co-owner(s) should sign a NOC or No-Objection Certificate to process the respective loan application.

Industrial Property:

It is referred to as the property used for manufacturing, developing, and producing any products or commodities.

Different Types of Loan Against Property

Listed below are some of the most common types of loan against property, a clear understanding of which can help you figure out the right loan type for you:

LAP Against Debt Consolidation:

A LAP against debt consolidation enables borrowers to consolidate various debts easily while saving on the EMIs. You should look for an option delivering access to competitive interest rates and a flexible tenure to provide access to cost-effective repayment. All you are expected is to meet the defined eligibility criteria while submitting the necessary documents and applying for the loan online.

Commercial Purchase or Property Loan:

A commercial property or purchase loan is another type of loan against property. It is the loan that is taken to buy property intended only towards supporting commercial activities. Some of the common types of loans for property for commercial units are shopping complexes, offices, workspaces, and others. The interest rates for commercial property or purchase loans also remain on the cost-effective spectrum.

Lease Rental Discounting Loan:

Leasing is a type of renting property for a longer duration. It is an important aspect in different types of loan against property options in which the loan is taken against leased properties. Under this type of loan, the rent you will receive from leasing the property will go towards paying the amount of loan. The loan tenure in this case will depend on the lease duration.

LAP Against Transfer of Property Balance:

The facility of property balance transfer will enable you to transfer the existing debt over to a reliable loan provider. By doing so, you can leverage the benefits of things like quick loan processing, high-value top-up loan, affordable interest rate, part prepayment facility, and so more.

Eligibility Criteria to Take a Loan Against Property

The LAP or Loan Against Property might vary from one lender to another. Some eligibility criteria for borrowers to apply for LAP are:

• The applicant should be a citizen of India
• The applicant should reside at the current place of residence for a minimum of three years
• The applicant should at least be of 24 years of age
• Applicants who are self-employed should be in the same business for around three years
• Applicants who are salaried individuals should possess at least three years of work-related experience with the current employer

Documents Required for a Loan Against Property

The list of total documents required for applying for LAP will also vary from one lender to another. Still, some of the common documents to consider are:

• Property or title documents
• Proof of bank statement -including operative bank account statement, employment letter, or salary slips
• Address proof -including passport, rent agreement, utility or electricity bills
• Identity proof -including PAN card, Aadhar Card, GST registration if you are a company or a firm
• Employment or income proof -including employment letter, salary slips, profit or loss statements, income tax returns, balance sheet

Conclusion

With a reliable lending company or agency, you can apply for the LAP loan -whether you have a residential or commercial property. To expect the best outcomes, it is recommended to know about the different types of loan against property in Mumbai. When you apply for a loan against property, it is important to understand competitive rates of interests, tenures, loan amounts, and hidden charges of the loan. Real Money Solutions a reputed loan provider offers a wide range of loans to the residents of mumbai. Be it loan against property or home loan, you can always rely on our services.