Is it safe to take Loan Against Property?

The current economic recession due to the COVID-19 crisis has impelled people to desperate measures, resulting in debt traps. Therefore, secured loans have become popular among salaried individuals and business owners. For instance, a business owner can seek loans to expand his business operations, whereas a salaried individual can meet requirements like urgent medical treatment, children’s higher education, or wedding. 

LAP – Loan against property

A loan against property is a secured loan provided by the banks and NBFCs against residential or commercial properties. The lap loan interest rate is significantly lower compared to other personal or business loans. Any salaried or self-employed individual with a pre-owned property can avail of the home mortgage loan. 

The loan amount sanctioned is also high, which can be repaid within a flexible tenure of up to 20 years. Due to the lower interest rate, the repayment of the loan amount becomes easy. However, a lap loan serves multiple purposes, the main criteria for availing it is that the loan must be used for a legitimate purpose. 

It may be convenient for the existing customers of the banks and NBFCs to receive a lap loan, new customers will have to furnish relevant documents and show credit history, repayment capacity, and the value of property to be mortgaged. 

Why is a loan against property popular among individuals? 

  • The lap loan interest rate is lower than personal loans. 
  • The borrower can continue to occupy his resident/property after the loan is approved. 
  • It serves multiple purposes such as medical urgency, higher education, and marriage. 

Here are the reasons to understand why acquiring a loan against property is safe and how it can help you meet your immediate requirements. 

  • Loan amount 

Since the loan amount is high, you can avail of a flexible loan tenure based on your financial requirements. However, you must fulfill the income criteria to be able to repay the loan amount. The loan repayment tenure varies from lender to lender, but usually, it is between 15 to 20 years. 

  • Property valuation

A lap loan is offered based on the value of the property that is to be mortgaged. The property could be residential or commercial. Your property is appraised by the banks or NBFC companies before deciding a loan amount. The loan amount approved could be based on market value. So, it is vital to analyze the LTV ratio offered by the bank.

  • Property ownership 

The lender may reject your loan application if the Housing Project does not have a legitimate title or is not approved by the local authorities. Also, you must meet the eligibility criteria to avail of a loan. 

  • Loan repayment tenure

Compared to any other personal loan, the loan repayment tenure of a lap loan is longer. The monthly equated installments can be paid within several years, and the lap loan interest rate is much lower. A longer repayment tenure ensures minimum EMIs. 

  • Repayment capacity 

A borrower’s repayment capacity is measured based on income statements, credit history, and the existing loans. If previous loan amounts are paid on time by the borrower, and the CIBIL credit shows positive, the loan amount is approved within three days max. 


A loan against property is the best way to meet your urgent financial needs. It offers lower lap loan interest rates, longer loan tenure, and greater flexibility.

Related posts

Leave a Comment