Is it Good Thing to Take Loan Against Property To fulfill Personal Needs

What are the Benefits of a Loan Against Property to Meet Personal Needs?

A loan against property or LAP loan is the type of loan where you can borrow a sum of money from housing finance entities against a residential or commercial.

LAP loan interest rate is lesser as compared to personal loans.

Salaried person, self-employed, or business personnel, who own a pre-owned and immovable property, can avail of this loan.

LAP loan helps in medical emergencies, house renovation, wedding, or business purposes.

Advantages of Loan Against Property

Low-Interest Rates
LAP loan interest rates usually range between 11 to 15 percent. They are cheaper than personal loans since less default risk.

Higher Loan Amount
LAP loan is a secured loan that involves a higher sum of money. The loan amount is usually around 60 per cent of the current market value of the property. In the case of a lump sum amount, it is beneficial.

Longer Loan Tenure
Along with higher loan amounts and low LAP loan interest rate, the tenure to repay the loan is also longer, and it can be up to 20 years. As a result, the burden of monthly EMI will be less.

Property Occupancy
The applicant can continue to occupy the property against which the loan is availed. Unless there is a case of a defaulter, the property ownership remains with the borrower.

Loan Replenishment
An existing client can avail of the facility to add an amount to the loan. A new property evaluation is not necessary since the property is already mortgaged with the moneylender.

However, this will depend on some factors like repayment of an existing loan, the remaining balance of that loan, current income, and loan to property value ratio. The document verification process is not necessary for an existing customer.

A good thing about this loan is that you can avail it at one time or avail it periodically like an overdraft facility. Also, a leased-out can help you avail of this.

Vital Aspects that the Borrower Should Remember

Eligibility Criteria

The primary requirement is immovable and self-owned property. Other criteria that the lender would validate are income proof, age, credit ratings, other liabilities, family income, and continuity of your job.

Repayment Criteria
The lending entity will gauge your repayment ability as the loan amount is high. You mustn’t default the loan repayment, as your lender will have the full authority to sell your property.

They will validate your repayment history, income capacity, and ongoing loan performance before approving the loan.

Tax Benefits
As a borrower, you must know that an ima LAP loan does not entitle you to claim tax benefits unless you use it for house construction or purchase, or business expansion.

Purpose of Loan
One of the essential criteria is that the loan should be for a real purpose. A legitimate purpose like wedding, medical emergency, business expenditure, children’s education, and property renovation can help you avail of this loan.


To summarise, a lucrative LAP loan interest rate, a higher sum of money, longer tenure, and flexibility allow many customers to opt for a loan against property.

Loan against property is beneficial in the long run. As a borrower, you must assess the risk involved in loan repayment before opting for this loan.

A loan against property ensures the financial security of an individual as well as a business entity. A LAP loan is an excellent way to keep your savings unbroken and meet your future financial requirements.

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