Loan Against Property (LAP) / Mortgage Loan is a well-established financial product, widely regarded as a win-win for both borrowers and banks. For borrowers, it offers access to substantial loan amounts to fund business expansion or high-value expenditures, with the advantage of longer tenures, lower interest rates, and affordable EMIs. Additionally, the application process is relatively straightforward
Purpose:
-
For all purpose(s).
-
Borrower to disclose specific purpose of loan and to give an undertaking that the loan shall be used for lawful/legitimate purposes.
Note: The loan shall not be granted for investment in real estate business, speculative (Speculation in stock, shares, securities, commodities, bullion etc.) & prohibitive purposes as restricted by Law.
Eligibility:
Business Purpose
-
Individual, Proprietorship, Registered Partnership Firms, Private/Public Ltd. Companies, LLPs, Societies, Trusts engaged in business activity.
-
Business unit should comply with applicable statutory requirements such as GST Registration, Shops & Establishment License, UDYAM Registration, Trade License, etc.
-
The cash generation and repaying capacity of the business shall be the primary criteria for loan consideration.
-
The unit should have cash profit in the normal course of business in the immediate preceding year. However, new enterprises/start-up units are also eligible based on merit.
-
The borrower should not be in the wilful defaulters list of RBI/CIC/others.
-
Business entities dealing in gems & jewellery, software, and IT enterprises are eligible under the scheme.
Retail Purpose
-
Individuals above 21 years and up to 70 years owning the property to be mortgaged, with sufficient income to repay the loan.
-
Borrowers may be salaried, self-employed, or retired persons with a regular income source.
-
If property is jointly owned, the loan shall be in joint names and all owners will be jointly and severally liable.
-
The property must be unencumbered and free from litigation.
-
Third-party property is not eligible except for close relatives (Spouse, Parents, Son, Unmarried Daughter, Brother, Brother’s wife, Parents of spouse).
-
Owners must act as guarantors in case of eligible third-party property.
-
Loan can be granted to a sole proprietor in individual capacity against property in the name of the proprietorship firm and occupied by the proprietor (to be classified under Retail in CBS).
Income Criteria:
-
For Salaried: Minimum Net Monthly Salary of Rs. 25,000/-
-
For Others (Non-Salaried): Minimum Net Annual Income/Net Profit of Rs. 3,00,000/- per year (for last 3 years)
NATURE OF FACILITY:
-
Term Loan: Up to 15 years for acquiring fixed assets for general business needs or to meet any personal financial requirements of the borrower.
-
Overdraft Facility: Available for working capital or business purposes for up to 15 years, subject to review every 3 years.
-
Composite Loan: First, determine the eligible loan amount. Then, allocate the loan limit for the term loan to finance fixed assets for business needs. The remaining balance will be available as an overdraft facility.
ASSESSMENT OF LIMIT:
| Loan Amount |
Overdraft Facility |
Term Loan |
| Upto Rs. 1 Crore |
Lower of:
(a) 65% of property value
(b) 25% of annual turnover
|
Lower of:
[a] 65% of realizable value of property
[b] 24 times Gross Monthly Salary/Income
|
| Above Rs. 1 Crore |
Lower of:
(a) 60% of property value
(b) 25% of annual turnover
|
Lower of:
[a] 60% of realizable value of property
[b] 24 times Gross Monthly Salary/Income
|
Loan Amount:
| Location of Property |
Minimum Amount |
Maximum Amount |
| Rural/Semi-Urban |
Rs 5 Lakh |
Rs 250 Lakh |
| Urban/Metropolitan |
Rs 5 Lakh |
Rs 750 Lakh |
Repayment Period:
-
Overdraft: Overdraft to be liquidated in 15 years OR up to the age of 60 years.
-
TERM LOAN: Loan amount together with interest to be repaid in maximum 180 Equated Monthly Instalments (EMIs) OR up to the age of 70.
RATE OF INTEREST:
Based on LTV( Loan to value) percent. Repo rate + 3.00 to repo rate + 4%.
Charges:
As per Bank's extant guidelines.