Mortgage

Definition:

A Loan Against Property (LAP) is a secured loan in which a borrower pledges a residential, commercial, or industrial property as collateral to borrow funds from a lender.

What is a Loan Against Property?

A Loan Against Property (LAP) is a secured loan that allows borrowers to obtain funds by mortgaging an owned property with a lender. The property serves as collateral, while the borrower retains ownership and possession of the property, provided the loan is repaid in accordance with the agreed terms.

The loan amount is determined based on factors such as the property’s market value, the borrower’s income, repayment capacity, credit profile, and the lender’s policies. Since the loan is backed by collateral, LAP generally offers higher loan amounts, longer repayment tenures, and lower interest rates than various unsecured loans. If the borrower fails to repay the agreed loan amount, the lender has the legal right to enforce the mortgage and recover the outstanding dues by following the applicable legal process.

Today, many lenders also offer a fully digital application process for a Loan Against Property. For example, eligible borrowers can apply for a Loan Against Property with Kissht, complete the application online, and track the status digitally.

Purpose of a Loan Against Property

Business Expansion
Higher Education
Medical Emergencies
Debt Consolidation
Wedding Expenses
Other Personal or Business Needs

Features of a Loan Against Property

Secured loan backed by residential, commercial, or industrial property
Higher loan amounts compared to unsecured loans
Generally, lower interest rates due to the pledged property
Longer repayment tenure for easier EMI management
Borrower owns and possesses the property during the loan tenure
Funds can be used for various personal or business purposes
Loan amount depends on the property’s value and the borrower’s eligibility

Loan Against Property vs Home Loan

Basis	Loan Against Property	Home Loan
Purpose	Multiple personal or business purposes	Purchase, construction, or renovation of a home
Collateral	Borrower’s existing residential, commercial, or industrial property	Property being purchased or constructed
Loan Amount	Based on the property’s market value and the borrower’s repayment capacity	Based on the property’s cost, value, and the borrower’s eligibility
Loan-to-Value (LTV)	Finances up to 50–70% of the pledged property’s value	Finances up to 80–90% of the property’s value
Interest Rate	Higher than a home loan but lower than many unsecured loans	Lower
Tax Benefits	No direct tax benefits for individuals unless the funds are used for business purposes	Significant tax savings on both the principal and interest amounts

Loan Against Property vs Loan Against Security

Basis	Loan Against Property (LAP)	Loan Against Securities (LAS)
Collateral	Residential, commercial, or industrial property	Financial assets such as shares, mutual funds, bonds, and insurance policies
Purpose	Suitable for personal or business needs	Generally used for short-term liquidity or working capital requirements
Loan Amount	Based on the property’s market value and the borrower’s repayment capacity	Based on the value and type of eligible securities pledged
Interest Rate	Higher compared to LAS	Lower

FAQs

What is a loan against property?

A Loan Against Property (LAP) is a secured loan in which a borrower pledges a residential, commercial, or industrial property as collateral to borrow funds from a lender.

Can I continue using my property after taking a LAP?

Yes. You can continue to own and use the property as long as you repay the loan in accordance with the agreed terms.

How much loan can I get against my property?

The loan amount depends on the property’s market value, your income, repayment capacity, credit profile, and the lender’s policies.

What can a loan against property be used for?

LAP may be used for business expansion, education, medical expenses, debt consolidation, and other personal or business financial needs.

What happens if I fail to repay a loan against property?

If repayments are not made as agreed, the lender may take legal action to recover the outstanding dues, including enforcing the mortgage in accordance with applicable laws.

Browse all keywords