Different Kinds of Loans against Property
A Loan Against Property (LAP) is a unique financial product offered by leading banks and non-banking finance companies (NBFCs) with the property as the collateral.
Since a property which is mortgaged for the loan against property (LAP), the same works as a security for the lenders and helps them to offer a lower interest rate.
However, when it comes to the application of a mortgage loan to any lender, you also need to know what types of loan against property you can avail of. In other words, you need to know what properties are eligible to apply for LAP.
Let’s discuss the loan against property types that are eligible for mortgage purposes.
Loan Against Property is provided for these Properties
- Registered Properties with a Map
A property which is registered with proper maps and clear sanction plan by the local town/city/municipality authorities is one of the best mortgages in the finance industry.
All leading banks and non-banking finance companies (NBFCs) provide a hassle-free loan against property for this type of property profile.
The legal title of the property is a clear and best bet along with the local authorities’ sanction plan to offer you an affordable LAP.
Also Read: Loan Against Property: The Types and Advantages at a Glance
- Registered Properties without a Map
The next property types are the ones those are registered properties without maps.
While processing the loan against property for such properties, banks and NBFCs look for risk mitigation factors such as ATS and a proper sale deed/agreement.
These properties come with a direct risk of having no clear plan by local authorities.
Thus, if you are willing to get a loan against property, you will need to provide some sort of convincing to your prospective lender in the form of co-applicants or extra income.
- GPA
GPA stands for General Power of Attorney. GPA is a legal instrument that offers a person with an authority to act on the behalf of another person.
GPA does not give any ownership of an immovable property to a person being offered the authority.
Thus, banks and NBFCs don’t offer a loan as GPA holder does not have any legal ownership over the GPA property.
If you really want to avail a loan against property (LAP), in this case, you may contact some Housing Finance Companies (HFCs) that approves an amount to a GPA holder.
You can also count on external financiers, but they may charge you a higher rate of interest which may cough up your income.
Additional Read: Different Types of Loan Against Property
- Lal Dora land
Lal Dora villages are a part of Delhi property scene and there are around 360 villages under the Delhi Lal Dora. These are such areas that are left for residential or livestock purposes. Generally, no banks or NBFCs would lend money for such properties.
- Agricultural Land
Agricultural land is for agricultural purposes and you can’t get a loan against such properties. There are certain restrictions on them, and it’s not easy to convert them into a non-agricultural land.
Also, banks and other financiers don’t lend for a property which is above the 3rd floor of a building or an empty plot.
You can avail a loan against property only for the following properties such as:
- Self-owned residential property
- Self-owned and self-occupied residential property
- Self-owned cum rented residential property
- A piece of land that’s self-owned
- Commercial properties that are self-owned
- Rented commercial properties that are self-owned
Also Read: Fulfil your dream of travelling the world without worrying anymore
The Bottom Line
Availing a loan against property (LAP) can easily let you have a higher amount at a lower rate, all that you need to know is – the type of properties that are eligible. You are now aware of the properties that are eligible for the loan against properties to lenders.
Category: Loans
