Lot of things in life are expensive. Examples include higher education, medical emergencies, unavoidable home renovation, etc.

When you don’t have enough money to meet these expenses, then you are usually left with only one option, which is a taking an axis bank personal Loan, HDFC personal loan, etc. However, there is another option too, which is Loan Against Property (LAP).

What is LAP?

As the name implies, a Loan Against Property is a loan provided on the basis of your property (house or land). Generally speaking, you can get a loan as much as 40% to 60% of the property value. So, if you are taking a LAP against a house worth Rs. 50 lakhs, then you can easily get about Rs. 20 lakhs to Rs. 30 lakhs. Although the actual amount may also depend on other factors such as your CIBIL score, monthly salary, etc.

What are some of the things you can get a LAP for? What types of properties qualify for it?

Some of the most common reasons that banks approve of for a LAP include the following:

• Business expansion
• Medical treatments
• Higher education
• Marriage expenses

You can apply for a LAP with a house irrespective of whether it’s self-occupied or rented. You can also apply for a LAP with a plot of land.

What is the eligibility criteria for a LAP?

Different banks follow different eligibility criteria for LAP. However, some of the most common requirements are as follows:

• A salaried professional who has a sufficiently high income can apply for LAP.
• Self-employed individuals who are also taxpayers can apply for LAP.
• Business owners who have the necessary documents and bank statements can apply for LAP.
• The maximum loan amount cannot exceed the value of the property itself.
• The applicant must have a high CIBIL score. In addition to that, they should have never defaulted on a loan before.
• The applicant must not have an exceedingly high debt already.

What is the difference between LAP and secured personal loans?

Most people know how personal loans work. However, LAP is still a relatively new concept. Hence, some confusion is natural.

Before you understand the difference between a LAP and the secured personal loans, it’s important to understand the difference between a secured loan and an unsecured loan.

A secured loan is a type of loan which is taken against collateral. For instance, if you want to take a loan for a car, then you can get a secured loan by offering the car as collateral which serves as security for the lender. So, if you are unable to repay the loan down the road, the bank can seize the car if need be.

An unsecured loan, as the name suggests, is taken without collateral. Since there is no security, this type of loan usually has a high interest rate. It’s also harder to obtain than a secured loan.

Now that you know the difference between a secured loan and an unsecured loan, and you know what a LAP is, it’s easy to understand the difference between a LAP and a secured personal loan.

A LAP is a loan against property. So, it’s the property that serves as collateral. However, a secured loan like axis bank personal loan, etc. can be obtained by offering any kind of collateral that’s not limited to real estate. For instance, you can get a secured loan against gold, bonds, jewelry, cars, etc. So, it can be said that every LAP is a secured personal loan, but not every secured personal loan is a LAP.

Why is LAP so popular compared to a personal loan?

LAP is becoming one of the most popular types of loans in India, and there are many reasons why. For starters, it can be obtained at an interest rate as small as 12% (or even lower). It is also easy to get as there are few formalities and the approval period is quite short. Moreover, compared to most personal loans which can usually have a maximum tenure up to 5-8 years, LAP can have a tenure as long as 15 years (or even more).

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