Loan Against Property versus Loan Against Securities

Loan against property (LAP) Loan against security (LAS)
Instrument mortgaged: property; commercial or residential. Instrument mortgaged: mutual funds, National Savings Certificate, Kisan Vikas Patra or LIC policy or fixed deposits and jewellery.
Processing fee: Around 1%. Processing fee: Minimum 0.25%.
Margin required: Around 15-20%. Margin required: Around 15-20% of the value of the instrument.
Salaried employees / professionals as well as self-employed and other income tax assesses for last 3 years with a minimum gross annual income of Rs. 60000 are eligible for the loan. Salaried individuals can get up to 36 times of net monthly income as a loan. Others can avail up to 3.5 times the net annual income (average of last 3 years) as a loan. Possession of the instrument to be mortgaged justifying the value of the loan applied for.
Loan tenure: Up to 15 years Loan tenure: Repayment within the maturity period of the instrument mortgaged for the loan. You can get loan against gold jewellery which needs to be repaid at the end of a fixed loan tenure which is pre-determined. For instance, State Bank of Travancore offers gold loans for 6-12 months. The tenure can be extended based on the customer’s request and the banks decision regarding the same.
Documents required:

Salaried

  • Income proof (Form 16 along with salary certificate from the employer).

Professional / self-employed

  • Income Tax returns for past 3 years.
  • Latest income tax assessment order (for overdraft amount of over Rs. 5 lakh).
  • Income certificate from appropriate revenue authority like Tehsilldar/BDO/SDO (for agriculturist)
  • Original title deeds of the property offered for mortgage
  • Paid receipt of latest maintenance, water tax, municipal tax and any such taxes.
  • Non encumbrance letter from co-op society.
  • Permission to create Equitable Mortgage from society.
  • Permission to create equitable mortgage from society.
  • Last 6 months bank statements of main bank account.
Documents required:

  • Passport size photograph
  • Proof of Identity PAN Card/ Voters ID/ Passport/ Driving License
  • Proof of Residence Recent Telephone Bill/ Electricity Bill/ Property tax receipt/ Passport/ Voters ID
  • Statement of Bank Account/PassBook for last 6 months
  • Original form of the instrument to be mortgaged.
Maximum loan amount: Up to 40-60% of the value of property as a loan against property. Maximum loan amount: In most cases, up to 50-80% of the value of the security mortgaged (if the security gives fixed returns)

If it gives variable returns, s, the maximum loan amount is 40-60% of the value of the security.

Note: The loan amount is based on the type of the instrument to be mortgaged. In case of loan against jewelry, it depends on the valuation.

Interest rates: 13-17%. Interest rates: 12-15%.
Overdraft facility available. Overdraft facility available.

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