Loan against property has shot to fame due to many practical reasons. Lenders offer fast approval, simple documentation, relaxed eligibility, high loan to value, long tenure, and many other value-added features on loan against property. However, due to its broad scope and features, borrowers often get confused about the property type they can mortgage.
This article provides a laydown of the various property types you may pledge to avail a loan against property or LAP loan. At this point, it is wise to note that every lender has their unique rules, which you must inquire about before submitting theloan against property application form along with the required documents.
LAP Loan – Property Types You Can Pledge
You can pledge any of the following three types of properties for availing a Personal loans. The first is commercial, the second is residential, and the third is multiple-owner property.
The following are the subtypes of each:
1. Commercial Property
You can mortgage three types of commercial properties for availing a LAP loan- self-occupied, rented, or vacant. Here are the details of each:
Self-Occupied
A self-occupied property is the one in which the borrower carries out any business. The property must be registered as commercial and possess all legal documents certifying its status. It should also be free from legal disputes.
Rented
You can also pledge a rented property for availing a LAP loan. However, you need to discuss it with the tenant before submitting the documents required for loan against property. Lenders often schedule a meeting with both parties to discuss the terms and receive consent.
Vacant
A borrower can unlock the dormant value of a vacant property by mortgaging it. Lenders offer attractive terms and easy eligibility for a vacant property. However, the property needs to be free from legal disputes.
2. Commercial Property
Like a commercial property, a residential property owner can mortgage three types of properties for availing a LAP loan – vacant, rented, and self-occupied. The following are the details of each:
Vacant
A vacant property is one where the property owner or their family does not live. Usually, loan against residential property fetches the lowest rates. However, the property needs to be well-maintained and in a prime location. If it is in a dilapidated condition, the lender may increase the LAP loan interest rate or may even reject the loan application, said Lisa N. from Mimy Online.
Rented
In India, house owners often rent their house to receive a fixed amount every month. You can mortgage the property and repay the LAP loan with the rent amount. However, before mortgaging the property, discuss with the tenant and take them into confidence.
Self-Occupied
A self-occupied property also makes you eligible to avail a LAP loan. Ensure that the house is legally free to be mortgaged and is in good condition.
3. Multiple-Owner Property
If you own a property with your family members, you are eligible to apply for aLAP loan. Indian lenders allow the following relations while considering a LAP loan for multiple-owner properties:
- Unmarried daughter or son and father or mother, or both
- Married son and father or mother, or both
Remember, the lender will check the percentage of share each owner has on the property to determine the loan amount and interest rate.
Conclusion
The fact that both self-employed and salaried professionals with any types of property ownership can avail a LAP loan makes it a convenient loan option. Keep the documents required for loan against property ready to expedite loan approval. Also, read the terms provided by the lender before selecting the right lender.
