A Loan Against Property (LAP), also known as a mortgage loan or property-backed loan, is a type of loan where a borrower pledges their property (residential or commercial) as collateral to secure a loan from a financial institution or lender. The property acts as security for the loan, and in case the borrower defaults on repayment, the lender has the right to sell the property to recover the outstanding amount.

Loan Against Property offers borrowers access to funds based on the value of their property. The loan amount typically depends on the market value of the property and the lender’s policy, with loan-to-value ratios ranging from 50% to 75% of the property’s value. The borrower can use the funds obtained through the loan for various purposes such as business expansion, debt consolidation, education, medical expenses, etc.

Interest rates on Loan Against Property tend to be lower compared to unsecured loans since the property serves as collateral, reducing the risk for the lender. The repayment period for such loans is usually longer, often ranging from 5 to 20 years, enabling borrowers to repay the loan in affordable installments.

It’s important to note that failure to repay the loan as per the agreed terms and conditions can lead to foreclosure, where the lender may sell the property to recover the outstanding amount. Therefore, borrowers should carefully consider their financial capabilities and the purpose of the loan before opting for a Loan Against Property.