Whether you’re looking for credit to meet unexpected personal needs or fund your business expansion, getting a loan is the best decision. Financial institutions offer multiple loan products depending on your requirements. However, a loan against property (LAP) stands out as the most secured form of a loan with affordable interest rates.
What is LAP Loan?
A loan against property is a secured loan that you can use for both personal and business purposes. You can pledge any commercial or residential property in your name as collateral even while you’re occupying it. Moreover, a loan against property has zero usage restrictions, which means you can use it to finance a variety of purposes like a wedding, a medical emergency, your child’s education, business expansion, family vacation, and much more.
But before you proceed with your LAP application, make sure your property is legal and has all relevant government approvals. No financial institution will accept property built on illegal land as a mortgage.
Now, many people often confuse LAP with home loans. But the two loan products serve different purposes.
What is LAP in a home loan?
You can take a home loan only for constructing or buying a house. Whereas, you can use a loan taken against property to fund any personal or business requirements. Although you can avail of LAP to buy a house as well, its interest rates are usually higher than home loans.
Besides, you can enjoy tax deductions for home loans, but for LAP, you can only receive tax exemptions for business purposes.
As you can see, LAP loans are ideal for both personal and business requirements, making it an excellent option to meet financial emergencies. To further understand “what is a LAP loan”, let’s look at some of its advantages.
Advantages of a LAP loan
1. Low rate of interest
While applying for a loan against property, interest rates are usually lower as compared to unsecured loans. As a result, you pay lower EMIs, which reduces your financial burden. Besides, the loan against property interest rate depends on factors like the value of the property, loan amount, your credit score, etc.
2. Longer repayment tenure
A loan taken against property can have a repayment tenure of up to 15 years. This means you can opt for longer loan tenure to reduce your EMIs. However, remember that longer repayment tenures also attract higher interest rates. You can use a loan against property EMI calculator to calculate your potential EMIs for the tenure you desire and choose accordingly.
3. Larger loan amount
Financial institutions will lend you a loan amount of up to 50-70 percent of your property’s existing market value. Therefore, if you own a high-value property, you will be able to borrow a large amount of money against it.
4. A quick application process
As LAP is a secured form of loan, lenders usually don’t follow a strict eligibility criteria to gauge your loan suitability. This means you can quickly get the loan at an affordable LAP rate.
To sum up
Your real estate investments can become a safety net during times of financial crisis. So if you’re ever in need of quick funds, take out a LAP.
With Tata Capital, you can get a loan to fund your requirements at affordable LAP rates and minimal documentation. Use our loan against property EMI calculator to understand your potential EMIs or check out the product here.