LAP full form in Banking is Loan against Property, which is a secured credit provided by housing finance companies, financial institutions, and NBFC against commercial or residential property. Unlike a business loan or personal loan, this financial assistance is typically offered at lower IR (interest rates). Anyone with a pre-owned property can apply for a loan against property, whether self-employed or a salaried professional, or in a range of enterprises.
However, the demand for LAP has increased over the years. This may be because it is cheaper than an individual with the lowest interest rates; the applicant can take possession of the property even after taking the loan, and use this loan for various purposes such as higher education of children, medical expenses, setting up business, marriage, etc.
What Else Should You Know About LAP?
There are various aspects you should consider before applying for LAP. However, the eligibility criteria for a loan against property are slightly different from a personal loan. Aspects to consider include the applicant’s savings, income, and repayment track record (repayment of credit card amounts, prior loans, and many more. The market cost of the property, age, financial stability, and employment status among others to be taken into account.