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.|
Professional / self-employed
|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.|