Most common FAQs regarding loans against property

A loan against property (LAP) is a form of loan facility availed by individuals and businesses against the mortgage of a commercial or residential property. It is a secured finance, where the borrower pledges the property as collateral against the loan amount. This loan is used for significant expenses, like house renovations, business expansions, or investments. Here, we will answer some of the most common FAQs regarding loans against property.

What are the perks of a loan against property?

One main benefit of a commercial property loan is a significant loan sum, a reasonable interest rate, and a flexible loan tenure. Additionally, you can leverage attractive offers from various lenders to meet your financial needs without any hassles. Some benefits of a loan against property are:

  • Depending on the lender’s policy and eligibility criteria, you can avail of a loan of up to 75% of your property value.
  • The repayment option for this loan is in comfortable EMIs. You can opt for a longer tenure of up to 15 years, which reduces your monthly burden.
  • You can benefit from a lower interest rate than other unsecured loans, as the loan is backed by your property, reducing the risk for the lender.
  • You can use the loan amount for any personal or business purpose, as there is no restriction on the end-use of the loan.
  • You can transfer your present loan against property with other financiers using the balance transfer facility and avail of lower interest rates and better terms and conditions.

What are the qualifying criteria for a loan against property?

The qualifying criteria for a loan against property vary from lender to lender, but some of the common factors that influence your eligibility are:

  • Your monthly income, current age, credit score, fixed monthly financial obligations, credit history, retirement age, etc.
  • The type, location, condition, valuation, and ownership of the property you want to mortgage.
  • The loan-to-value ratio
  • The type of borrower you are

You can use online tools like eligibility calculators and EMI calculators to check your eligibility and affordability for loans against property.

What are the papers required for a loan against property?

The documents required for a loan against property differ from lender to lender. Still, some of the common documents that you would require to submit for all applicants/co-applicants, along with the filled out and signed application form, are:

  • KYC documents include PAN card, Aadhaar card, passport, driver’s license, voter ID card, etc.
  • Income documents include salary slips, bank statements, income tax returns, profit-and-loss statements, balance sheets, etc.
  • Property-related documents include title deeds, sale agreements, property tax receipts, valuation reports, NOC from society, etc.
  • Other requirements, such as photographs, cheques, consent letters, etc.

You can find out the complete list of documents required for a loan against property on the lender’s website or contact their customer care for more details.

What are the risks involved in a loan against property?

A loan against property is a secured loan, meaning if you fail to repay the credit on time, the lender has the authority to take possession of your property and sell it to recover the outstanding loan amount. This can result in the loss of your property and affect your credit score and reputation. Therefore, you should be careful and responsible while availing and repaying a loan against property. 


These are some of the most common questions people ask related to loans against property. Knowing the answers to these questions makes your borrowing process easier.

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