What is a Loan against Property?

Loan against Property (LAP) is a secured loan provided by banks, housing finance companies, and other financial institutions against your commercial or residential property. Usually, the loan amount ranges between 50% - 70% of the property value and is given at a lower rate of interest as compared to business or personal loans.

LAP can be utilized for a number of reasons ranging from personal expenses such as education and marriage to business related expenses like working capital requirements or existing loan closure.




What are the benefits of a LAP over a personal loan?
A LAP has multiple benefits over a personal loan. Few of them are :-

1. Higher Loan Amount
2. Lower Rate of Interest
3. Longer Loan Tenor
4. Lower EMIs
5. Flexibility in deciding end use

Higher Loan Amount: The overall loan terms depend on a number of factors like annual income, past credit record, value of property etc. Despite this, while the maximum eligibility of a personal loan could be up to Rs. 2 Lakh for a normal customer, it is generally much higher for a LAP.

Hence, this product is extremely suitable for customers with a high loan amount requirement.

Lower Rate of Interest: A LAP is essentially a secured loan. Hence, the rate of interest of a LAP is generally much lower than a personal loan. This makes LAP an affordable and attractive loan product.

Longer Loan Tenor: The tenor of a personal loan is generally not longer than 3 years. On the other hand, the tenor of a LAP can be as long as 15 years in most financial institutions. This allows the customers to spread their expenses over a longer duration, thereby giving them more control and flexibility while planning their finances.

Lower EMIs: LAPs generally have lower-rate of interests and longer tenors compared to a personal loan. As a result, the EMI of a LAP is much lower than that of a personal loan.

A reduced EMI means a lower financial burden, thereby allowing customers to manage their finances effectively, and choosing exactly where they want to deploy their hard earned money.

End Use Flexibility: The end use of LAP depends solely on the customer! What's more? The same LAP can be used for multiple end uses as well!

For example, if a customer applies for a LAP of Rs. 10,00,000, the funds of this loan can be used towards both, business and personal expenses! Hence, the customer can use Rs. 3,00,000 towards marriage, Rs. 5,00,000 towards education and the remaining Rs. 2,00,000 to meet business related inventory requirements.

Also, the customers can continue using their property during the entire duration of the loan!

We at SMHFC provide Loan Against Property through our transparent, efficient and hassle-free processes. To know more, feel free to contact our customer support team on 1800-1234-427.
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