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What is LAP Loan? What are the Benefits

Updated: May 31, 2022
What is LAP Loan? What are the Benefits

A loan against property, popularly known as LAP, is a secured form of loan that can be availed of against a residential or commercial property as a mortgage. The loan amount can be used for any purpose, including meeting the child’s education expenses, funding business expansion, wedding expenses, etc. It is a secured form of personal loan.

The lender generally provides up to 75% of the market value of the property as a loan. In case of default or failure to repay, the lender keeps the right to auction the mortgaged property to recover the dues.

A loan against property from SMFG Grihashakti helps you to unlock the value of your property. Depending on our policy, eligible borrowers can get loan amount upto INR 5 crores*. Borrowers can choose a repayment tenure between 1 to 15 years.

Features and Benefits of Loan Against Property

The main feature and LAP loan benefits:

Higher loan amount: The borrower can avail of a higher loan amount, up to 60-70% of the market value of the property, which makes it an ideal financing option for meeting big-ticket expenses. Please note that the maximum LTV value depends on the lender’s policy and the borrower’s eligibility.

Competitive interest rate: As the loan amount is secured by a mortgage, there is a lower credit risk for lenders, which helps you to get a lower interest rate compared to a personal loan. At Grihashakti, we offer affordable loan against property interest rates. Our offers depend on the eligibility of the applicant, as well as our policy at the time of loan application.

Longer repayment tenure: The repayment tenure for LAP can go up to 30 years, which makes repayment affordable for borrowers. The maximum tenure depends on the current age of the applicant as well as their eligibility.

Income tax benefits: Depending on the use of funds, you can claim tax deductions under various sections of the Income Tax Act. For example, if the loan amount is used for building a new house or home renovation, you can claim a tax deduction on the interest as well as the principal component.

Zero-usage restriction: There is no restriction on the usage of loan amount and can be used for any purposes, except for financing unlawful activities.

Fast approval and disbursal: One can receive funds quickly by meeting all the eligibility criteria and submitting all the necessary documents.

No foreclosure charges: No prepayment penalty charged on closing the loan account early, before the repayment tenure ends, as long as the loan was taken on floating interest rates for non-business purposes.

Documents Required for Loan Against Property

The following documents are required to avail a LAP by a salaried professional:

  • Proof of identity- PAN
  • Proof of residence- AADHAR, Utility Bill, Property Tax
  • Proof of income- 3 months salary slip, 2 years Form 16, 6 months bank statement
  • All documents related to the property you want to pledge

Self-employed professionals need to provide the last 2 years of ITR with computation, CA audited financial wherever applicable, and 6 months primary bank account statement.

Depending on your eligibility as well as our policy, additional documents may be requested.

Factors Affecting LAP Eligibility

The following factors affect the LAP eligibility:

  • Age of the borrower
  • Bad credit score and history of the applicants
  • Lack of regular flow of income
  • Lack of employment stability
  • Insufficient or lack of clear property documents
  • Higher debt-to-income ratio of the applicants
  • Underinsurance of the property
  • Rejection of the previous loan applications

Types of Property Can be Mortgaged for LAP

Only immovable, self-occupied, or rented residential property or commercial property can be offered a mortgage under LAP. The property should be free from any legal dispute and the title of the property should be clear.


At Grihashakti, we offer loan against property for multiple purposes upto INR 5 cr at affordable interest rates for flexible repayment tenures upto 15 years. Apply online today or contact us to know more.

Must Read : All You Need to Know about LAP EMI Calculator

Disclaimer: *Please note that this article is for your knowledge only. Loans are disbursed at the sole discretion of SMFG Grihashakti. Final approval, loan terms, disbursal process, foreclosure charges and foreclosure process will be subject to SMFG Grihashakti’s policy at the time of loan application. If you wish to know more about our products and services, please contact us.

SMFG India Home Finance Co. Ltd. (Formerly Fullerton India Home Finance Co. Ltd.)
CIN number: U65922TN2010PLC076972

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