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Beginners Guide to Loan Against Property (LAP)

Published on Nov 24, 2023Updated on Apr 18, 2024

Beginners Guide to Loan Against Property (LAP)

In the realm of financial solutions, a Loan Against Property (LAP) stands as a versatile option allowing one to leverage the value of their property for various financial needs. Whether you're looking forward to business expansion, funding your child's education, or even consolidating debts, LAP offers a viable avenue. This guide will illuminate the fundamental aspects of LAP, empowering you with knowledge to make informed decisions about your property assets.

What is Loan Against Property (LAP)?

Loan Against Property (LAP) is a secured loan where you pledge your property as collateral to secure a loan from a financial institution. This property could be your residential or commercial space. The amount you can borrow typically depends on the property's value, and lenders usually offer a percentage of the property's market value as the loan amount. LAP provides a convenient way to access substantial funds for various purposes, such as business expansion, education, medical expenses, or debt consolidation, leveraging the property's equity while allowing you to retain ownership. However, it's crucial to repay the loan on time to prevent the risk of losing the property.

Features of Loan Against Property

The features of availing Loan Against Property from SMFG India Credit are as follows:

1. Simple Eligibility Criteria

Easily qualify for a Loan Against Property with straightforward eligibility standards. Typically, being a property owner, and showcasing a stable income are vital for ensuring hassle-free access to this financial solution.

2. Attractive Interest Rates

Enjoy the benefit of attractive interest rates with Loan Against Property, making your repayments more manageable. The competitive rates add to the appeal, allowing you to save significantly over the loan tenure.

3. High Loan Amount and Longer Repayment Tenure

Secure substantial funds up to INR 5 crore through LAP, leveraging your property's value. Additionally, enjoy the flexibility of an extended repayment period of up to 180 months. This dual advantage ensures you can borrow a significant sum while comfortably repaying it over time.

4. Simple Documentation and Quick Processing

Experience a seamless application process with minimal paperwork. Loan Against Property offers hassle-free approval due to simplified documentation requirements, enabling swift processing and quicker access to the funds you need.

Loan Against Property Interest Rates

At SMFG India Credit, we understand the significance of competitive interest rates in making your financial decisions. Our Loan Against Property (LAP) offerings come with attractive interest rates, ensuring affordability and convenience. We believe in transparency, and our interest rates are tailored to suit various customer profiles, ensuring that you get the best deal for your financial needs.





Interest Rate

Interest rates will be calculated based on several factors (location, net income, business stability, collateral, and existing monthly obligations) and remain competitive and as low as possible.

Loan Amount

Upto INR 5 crore

Loan Tenure

Upto 180 months

Cheque Dishonoured Charges

INR 300

Proceeding Fees

Upto 3% of the Loan Amount

Customer Type

Salaried/ self-employed/ SMEs

Late Payment Charges

2% plus GST charged monthly (24% per annum) on the overdue amount calculated on day-to-day basis.

Explore the detailed information about Loan Against Property Interest Rates

Steps to Apply for Loan Against Property

Online Application: Begin by visiting our official website. Fill out the user-friendly online application form, providing essential details about your property and financial status.

Document Submission: Upload the necessary documents, including property papers, income proofs, and KYC documents, for verification. Ensure all documents are clear and authentic.

Property Valuation: Our team will assess the value of your property to determine the loan amount you qualify for. This step involves a thorough evaluation to ensure accuracy.

Approval and Offer: Once your documents are verified and the property valuation is complete, you'll receive a loan offer detailing the approved amount, interest rates, and repayment terms.

Acceptance: Review the offer carefully. If it meets your requirements, accept the terms and conditions. This step signifies your agreement with the loan terms.

Disbursement: After acceptance, the loan amount will be disbursed directly to your bank account. SMFG India Credit ensures a swift and hassle-free disbursement process.

Repayment: Begin repaying your LAP through our convenient payment options, adhering to the agreed-upon schedule.

SMFG India Credit LAP application process is designed for ease and efficiency, ensuring a seamless experience for our valued customers.

Documents Required for Loan Against Property

SMFG India Credit has a simple and minimal documentation requirement. The list is as follows:

1. For salaried

  • Proof of Identity: Aadhaar Card, Passport, or Voter ID.
  • Proof of Residence: Utility Bills or Rent Agreement.
  • Income Proof: Salary Slips, Form 16, and Bank Statements.
  • Property Documents: Sale Deed, Property Tax Receipts, and NOC from Legal Owners.

2. For self-employed

  • Proof of Identity: Aadhaar Card, Passport, or Voter ID.
  • Proof of Residence: Utility Bills or Rent Agreement.
  • Income Proof: ITR Returns, Balance Sheet, and Profit & Loss Statements.
  • Property Documents: Sale Deed, Property Tax Receipts, and NOC from Legal Owners.

At SMFG India Credit, we ensure a smooth loan application process. Having these documents ready facilitates quick verification and approval, ensuring your LAP journey is seamless and efficient.

Must Read: List of Documents Required for Loan Against Property

What Are the Eligibility Factors For Availing a Loan Against Property?

Availing a Loan Against Property (LAP) at SMFG India Credit involves meeting certain eligibility criteria. 

  • Salaried individuals need to showcase stable employment, a good credit score of 750 and above, and a consistent income source. They should be Indian residents between the ages of 21 and 65 years.
  • For self-employed individuals, a robust business track record, financial stability, and a healthy credit history are crucial. They should be residing Indians between 25 to 65 years of age.
  • The property being mortgaged should have clear titles and legal approvals. 

SMFG India Credit evaluates these factors meticulously, ensuring borrowers meet the eligibility requirements. By adhering to these criteria, applicants can secure LAP with competitive interest rates and favourable terms, enabling them to leverage their property for various financial needs.

Must Read: How Can I Utilise a Loan Against Property?

Factors Affecting Loan Against Property Eligibility

When seeking approval for a Loan Against Property (LAP), they go through the eligibility check process. 

  • First among these is the credit score, where a higher score showcases financial responsibility and significantly enhances eligibility, with lenders usually preferring scores of 750 and above. 
  • Equally vital is the stability and regularity of the applicant's income sources, a key determinant for approval. Existing financial obligations, such as ongoing loans or credit card debts, are carefully examined as they influence the borrower's repayment capacity and overall LAP eligibility. 
  • Age, coupled with employment stability, is a crucial aspect; younger applicants with stable jobs tend to have higher approval rates. While a longer loan tenure might boost eligibility, it can result in higher interest payments over time. 
  • Lenders also evaluate the applicant's debt-to-income ratio, ensuring their ability to manage the new loan comfortably without undue financial strain. 
  • These factors collectively shape the LAP eligibility criteria, guiding lenders' approval decisions.

Steps to Increase Loan Against Property Eligibility

Boosting eligibility for a Loan Against Property (LAP) involves strategic steps. 

  • Start by improving your credit score, as a higher score enhances your approval chances. Strengthen your income profile with regular, verifiable sources, increasing confidence in your repayment capacity. 
  • Address existing debts to improve your debt-to-income ratio, showcasing financial stability. Consider adding a co-applicant with a robust financial profile to enhance eligibility. 
  • Opting for a longer loan tenure might increase eligibility, but it's essential to balance this with the associated interest costs. 
  • Regularly review and rectify any errors in your credit report. 
  • Ensure the legal clarity of your property with clear titles and minimal disputes, further bolstering your LAP eligibility.

Benefits of Using Loan Against Property Eligibility Calculator

Utilising a Loan Against Property (LAP) eligibility calculator provides several advantages. It allows you to estimate the loan amount you qualify for based on your financial details, helping you plan more effectively. By adjusting variables like income, property value, and existing liabilities, you can explore different scenarios and understand how they impact your eligibility. 

This tool facilitates informed decision-making, allowing you to optimize your loan application and ensure a smoother approval process. Additionally, it offers transparency and clarity, empowering you with the knowledge needed to navigate the LAP application journey confidently.

Tax Benefits of LAP

Loan Against Property (LAP) comes with potential tax benefits. The interest paid on LAP is eligible for tax deductions under Section 37(1) of the Income Tax Act. These deductions can be claimed if the borrowed funds are utilised for specific purposes like home renovation or business expansion. However, it's crucial to consult with a tax advisor to understand the specific conditions and implications based on your individual circumstances. Leveraging LAP with strategic planning can provide financial advantages through these tax benefits.

How To Apply For Loan Against Property?

Applying for a Loan Against Property is a simple straightforward process. Begin by researching and choosing a reliable lender like SMFG India Credit. 

  • Check the eligibility criteria and gather the required documents, including proof of identity, address, income, property ownership, and financial statements. 
  • Utilise the online application platform or visit the branch to fill out the application form. 
  • Submit the necessary documents and wait for the lender's representative to initiate the verification process. 
  • Upon successful verification, the loan agreement will be discussed, and after mutual agreement, the loan amount will be disbursed. 
  • Ensure all details are accurate, and you've understood the terms and conditions before finalising the application.

Key Things to Remember When Availing a Loan Against Property

1. Analyzing And Providing the Correct Property Valuation

Ensure your property is accurately valued to maximise your loan amount. Consider professional evaluators for precise assessments.

2. Comparing Multiple Lenders in Terms of Interest Rates

Research and compare interest rates from various lenders. A slightly lower rate can significantly reduce your overall repayment burden.

3. Comparing the Different Fees And Charges

Scrutinise additional fees like processing charges and prepayment penalties. Select a lender with transparent and minimal fees.

4. Choosing the Right Loan Tenure

Opt for a tenure aligning with your repayment capacity. Longer tenures may lower EMIs but increase overall interest payments.

5. Checking Your CIBIL Score

Maintain a healthy credit score (above 750) for favourable loan terms. Address any issues in your credit history before applying.

6. Knowing the Eligibility Criteria of the Lender

Understand the lender's eligibility criteria. Fulfilling these requirements enhances your chances of approval.

7. Assessing Your Loan Repayment Capacity

Evaluate your financial stability. Lenders assess your income and existing debts to determine repayment ability.

8. Negotiating with the Lender

Negotiate terms such as interest rates and processing fees. Skilled negotiation can result in more favourable loan conditions.


In conclusion, a Loan Against Property (LAP) can be a powerful financial tool, offering substantial funds for various needs. To make the most of this opportunity, accurate property valuation, thorough lender comparisons, understanding fees, and selecting suitable tenure are crucial. By choosing SMFG India Credit as your trusted partner in this journey, you not only gain access to substantial funds but also benefit from a commitment to transparency, competitive terms, and a customer-centric approach. Apply now!

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


How can I calculate EMIs for LAP?

Utilize online EMI calculators, entering the loan amount, interest rate, and tenure for instant results. These tools help you plan your repayment effectively.

Can I live in my house after mortgaging it for LAP?

Yes, you can continue residing on your property while using it as collateral for a loan against property.

What happens if I default on my LAP?

Defaulting may lead to penalties, increased interest rates, legal action, and even property foreclosure.

Can I prepay my LAP?

Yes, most lenders allow prepayment of LAP. However, check the terms, as some may have prepayment charges.

What kind of properties can be mortgaged for LAP?

Residential, commercial, and industrial properties can be mortgaged for a loan against property.

What can be the minimum repayment tenure for availing of a loan against property?

Loan Against Property typically has a minimum repayment tenure of 2 to 3 years.

For a loan against property, can I have a co-applicant?

Yes, having a co-applicant, usually a family member, can enhance eligibility for a Loan Against Property.

What are the things that can be used as security for loans against property?

The property being financed, land, or any other valuable asset can be used as security for loans against property.

Can a loan against property be used as an overdraft?

Yes, some lenders offer LAP as an overdraft facility, allowing you to withdraw funds as needed.

Do you require a property to be insured when availing a loan against property on it?

Yes, lenders often require property insurance to protect their interests in the event of unforeseen events.

How can I foreclose my loan against property?

Contact your lender, obtain the foreclosure amount, and make the payment through cheque or demand draft.

What Can Loan Against Property Be Used For?

LAP funds can be used for diverse purposes like business expansion, education, medical expenses, debt consolidation, and more.

Which Property Types Are Eligible for Loan Against Property?

Residential, commercial, and industrial properties are eligible for Loan Against Property.

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