Loan Against Property (LAP)

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Definition

Loan Against Property (LAP) allows borrowers to unlock the value in their existing property without selling it. The property — residential or commercial — is mortgaged to the lender, who provides funds typically at 50-70% of the property’s market value (LTV).

LAP interest rates (8.5-14% p.a.) are lower than unsecured loans but higher than home loans since funds can be used for any purpose: business expansion, education, medical expenses, debt consolidation, or personal needs. Tenures range from 5 to 20 years.

The property must be free of encumbrances (no existing mortgage) and have clear legal title. Both residential and commercial properties are accepted, with commercial properties sometimes getting lower LTV ratios.

Frequently Asked Questions

What can LAP funds be used for? ▾
Any legitimate purpose — business expansion, working capital, education, medical expenses, debt consolidation, home renovation, or personal needs. There are no end-use restrictions in most cases.
What is the typical LTV for LAP? ▾
50-70% of the property's market value. Residential properties generally get higher LTV than commercial ones. The exact ratio depends on lender policy and property type.
Can I get LAP on a property with an existing home loan? ▾
Generally no, as the property is already mortgaged. However, some lenders offer a second charge LAP or you can first close the home loan and then apply for LAP.
Why It Matters

LAP lets property owners access substantial funds at competitive rates without selling their asset. It bridges the gap between secured and unsecured lending for diverse financial needs.

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