A salaried employee may have limited savings to fund their marriage. An individual may be a small business owner who wants to send his daughter abroad for higher studies. Alternatively, an individual may have a business plan to execute for which she needs an immediate influx of funds. In such cases, a micro loan against property (LAP) can prove to be immensely helpful. 

Loans can be secured or unsecured. While unsecured loans come without collateral, people prefer the former because of their ease of access and lower interest rates. Micro LAP belongs to the secured category and can help fill in the immediate need for cash that may arrive at an individual’s door. 

This article discusses what is micro LAP and everything an individual needs to know in order to help them ascertain if they should apply for one. 

What Is Micro LAP?

A micro LAP refers to a secured loan wherein the borrower keeps their commercial or residential property as collateral. These loans are a terrific way to tackle the monetary crisis period or to enable them to do something they desire, such as starting a new business or sending their daughter to study abroad. These loans can even be used for funding other needs, such as a family vacation, marriage, or anything else. 

Micro LAP Overview & Features

Following are some of the micro loan against property features to be kept in mind while applying for one:

Easy to apply

An individual can apply for a micro LAP online not only against a constructed property (commercial or residential) but also against a plot of land. It means that even if they do not have income tax returns (ITR) and other income proofs, they are eligible to raise a loan, but they may have to explain why they do not possess the requisite documents. 

Flexible

The borrower can avail of LAP conveniently for any amount between Rs XXX lakhs and Rs XXX lakhs with a comfortable repayment term to suit their financial position and ensure they do not suffer because of an unforeseen crunch. In most cases, micro LAP loans can be up to XXX years. 

Modifiable to suit every job profile

A micro LAP can be needed by anyone, from a salaried employee to a CA or an MBA. So, these are highly flexible and can be modified to cater to different job profiles with ease. The primary thought behind a loan against property is that anyone with property should be eligible for a loan against it, and the loan terms can be curated to align with their repayment abilities. 

Affordable interest rates

Micro LAPs are secured loans backed by property, which gives a sense of security to the lender. It also allows them to forward the sum to the borrower at a reasonable interest rate, which they consider affordable. It is imperative to understand that the micro LAPinterest rate would ultimately depend on several factors, such as the credit score of the borrower, property type, and loan amount. 

Significant loan amount

If the individual owns a high-value property, they can get a sizeable loan against it. It is because most lenders are happy to forward an amount equal to up to 70% of the collateral’s current market value.

Micro LAP Benefits

Following are some of the key LAP benefits: 

  • The individual can withdraw the entire amount or avail of it as a line of credit.
  • Lenders accept both residential and commercial properties as collateral. 
  • In most cases, there are no pre-payment charges involved, with a limit on maximum pre-payment available during a financial year.
  • Quick disbursal process that can cater to your immediate monetary needs.
  • Minimum documentation needs with effortless loan processing. 

Who Should Apply For Micro LAP?

There is no bar on who should apply for a micro LAP. It means anyone in need of funds and having property can apply for a micro loan against property to manage their upcoming monetary needs. 

Reasons To Get Micro LAP

A micro LAP loan is an excellent option for those who need a loan and own a property that can be used as collateral. The use cases for which you could apply for a loan against property are as follows: 

  • To meet the working capital needs of the business.
  • To expand the business.
  • To fund their child’s education expenditure.
  • To meet an immediate monetary crisis, such as medical expenses or repairs.
  • To meet the expenses of their child’s wedding.  

Wrapping Up

When individuals need funds, it is best to avail of a loan instead of using their hard-earned savings. Having a real estate investment can be your best bet, as it allows you to apply for a micro LAP online with optimum ease. Some lenders also allow borrowers to shift loans taken from elsewhere to convert them into a micro LAP online and reap the benefits of it. 

At Tata Capital, we offer loans to cover all the needs of an individual. Be it a personal loan, home loan, business loan, or a loan against property, we have a seamless approach combined with minimal documentation, which makes the application process clutter-free for the applicant.  If you want to understand more about your micro LAP loan before applying for one, check out our loan against property EMI calculator for more details. 

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