Fixed Deposit

All you need to know about Loan against property                         

What is a loan against property?

When there is an urgent requirement for funds, the normal tendency is to apply for a personal loan from a financial institution such as a bank. Although a personal loan is easy to obtain, it is an unsecured loan extended at a much higher interest rate than secured loans and thus causing you to pay a higher EMI.

A good alternative to a personal loan is the loan against assets owned by you. Your assets such as gold, shares, insurance policies and property lie idle. Banks such as IDFC Bank open the doors for you to avail loans at reduced rates of interest by offering loans on your assets. One such is the loan against property (LAP) product.

IDFC Bank’s Loan against Property product is convenient and easy to obtain. It costs you less and offers you many benefits including tax benefits under different sections of the Income-tax Act.

Features of Loan against Property

The main features of Loan against Property include

  • Loan amount up to Rs 5 crore subject to known sources of steady income and maximum of 60% of property value
  • Repayment tenure up to 15 years subject to 65 years of age of borrower
  • Attractive loan against property interest rates – up to 3% over current MCLR-1 Year rate of 8.8%
  • Choice of two products – Loan against Property Simple, Loan against Property Short Sweet
  • Loan eligibility calculator

You can choose the appropriate Loan against Property to suit your individual needs.

Two Types of Loan against Property

There are two types of LAP - LAP Simple, LAP Short Sweet. The details of the two variants are as follows.

LAP Simple

This product is quite easy to obtain and comprises features such as

  • Loan amount up to Rs 5 crore subject to 60% of property value
  • Can add income of family members to increase loan eligibility
  • Simple documentation
  • No restrictions on use of loan amount – you can use it for almost anything
  • Use of loan eligibility calculator

This is a straightforward Loan against Property product you can avail without much difficulty. It is useful for people who need funds quickly and at a lower interest rate. It is also useful for people to utilize their idle property asset to acquire other assets. It is easy to apply for loan against property with IDFC Bank’s simple application process.  

LAP Short Sweet

This is a unique product from IDFC Bank. Loan against Property Short Sweet allows you to leverage your idle asset to use loan amount generated from the property to park the amount in a current or savings account with IDFC Bank. This product offers multiple benefits akin to the ones enjoyed by savings or current accounts. The salient features of this product are 

  • Loan amount up to Rs 5 crore subject to 60% of property value
  • Loan amount up to Rs 5 crore subject to 60% of property value
  • Simple documentation
  • Can use the funds as an overdraft facility to save on interest
  • Loans available to salaried and self-employed
  • High liquidity – as simple as operating a savings account
  • Interest rate – up to 3% over current MCLR of 8.8%
  • Repay loan faster
  • Repayment up to 15 years subject to 65 years or retirement age
  • Increase in loan eligibility with the addition of co-applicants
  • Use of debit card facilities

 

The loan against property product is excellent for people with assets which are not in use. 

 

A loan against property is a secured loan and hence easy to obtain with few formalities such as KYC documentation and lodging of property documents. You must evaluate all the pros and cons of taking a LAP because if you are unable to repay the loan there are chances of losing your property. Thus, it is imperative that your income must be high enough to service the loan.