Published on May 29, 2024Updated on Oct 6, 2026
Does taking a Loan Against Property (LAP) mean that you lose ownership? Is taking out a high-interest loan better than a LAP?
A LAP can provide substantial funds for various purposes like education, business expansion, wedding expenses, medical emergencies, and so on. However, there are myths or misconceptions surrounding them that can confuse potential borrowers. Let us take a look at the common myths about a property mortgage loan or LAP and the reality behind them.
LAP or property mortgage loan is a secured loan that you can avail of from financial institutions to meet your fund requirements. You get the loan by pledging your property, which can be residential or commercial, as collateral. Being a secured loan, you can get higher loan amounts than unsecured loans like personal loans. Among other factors, the amount depends on the value of the property. Depending on your eligibility, you can get competitive interest rates and flexible repayment options.
Reality: LAP allows you to retain complete ownership of your property and you can continue using it freely. The property simply acts as a safety net or security for the lender in case the loan is defaulted. If this happens, the lender has the right to recover the outstanding amount by selling the property.
Reality: LAP can often be preferred by borrowers due to lower interest rates, higher loan amounts, and longer repayment tenures compared to unsecured loans.
Reality: You can never get the full value of the property as a loan. Depending on the lender's policy, you can get up to 70%* of the property value as the loan.
Reality: There are certainly other options to consider such as unsecured loans, especially for borrowers with strong creditworthiness. However, LAPs, as secured loans with your property as collateral, can offer lower interest rates than unsecured loans. It is important to remember that the interest rate and other loan terms will depend on factors such as your credit history, property value, income, and so on.
Reality: With most lenders, you can put up both residential and commercial properties as collateral, as long as you can provide the relevant property documentation.
Let us look at the general process involved in applying for a loan against property:
LAP is a valuable financial product that can offer significant funds against your property while letting you retain ownership and usage rights. Additionally, you can get advantages such as competitive interest rates and longer repayment tenures compared to unsecured loans. By understanding the realities behind common myths, you can make informed decisions about LAPs.
SMFG India Credit offers customised property mortgage loans to salaried employees, self-employed individuals, and SMEs. You can get loan amounts of up to 70%* of the property’s market value, attractive interest rates, and flexible tenures up to 180 months*. You can use our Loan-to-Value (LTV) calculator to estimate the maximum amount you may get. Apply online or contact us to find out the best loan options and interest rates for your needs.
Important Note: This article is for general informational purposes only and may be subject to change from time to time. As product features, eligibility criteria, interest rates, charges, fees, tenures and other terms may be revised as per SMFG India Credit's policies, readers are advised to refer to the latest details from the respective product pages (please select from the top menu). For the latest loan charges, please visit Charges & Fees Link and for the latest Interest rates, please visit Interest Rate Rationale. Please note that final loan terms, disbursement process and eligibility criteria will depend on SMFG India Credit's policies at the time of loan application.
The content of this article is for information purposes only and does not constitute as, an offer or advise to avail any products or services from, or, a commitment to grant any loan by the company. It is not intended to create any rights or obligations against us. All content is provided "as is" without any warranty of any kind, either express or implied & we disclaim any warranty or representation, whatsoever, in regards to the content. Please refer to the Privacy Policy of the company to understand the use, processing and storage of your personal data.
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