Loan against Property(LAP) is one of the variants of the Personal loan, Laps are secured loans
offered by banks and financial institutions using one or more properties owned by you as collateral.
One can avail these mortgage loans against commercial property and residential property
collaterals. In a LAP the property is mortgaged and a fixed percentage of the prevailing market
value of the property (normally between 60-70% of the value of the property) is given to the
borrower as a loan. Though such a property is mortgaged to the lender, you are still allowed to
continue using it for residential or commercial purposes.
These loans are a better option as compared to personal loans due to their comparatively lower rate of interest. Additionally, unlike gold loans, where the gold ornaments are deposited with the bank and you do not get them back until the loan is paid in full, you can continue using the collateral property in a LAP while you are repaying the loan.
Loans against property are a highly preferred form of loans in India, and are much more easily available with the surge in banks and NBFCs providing such loans. Along with being cost-effective, these loans are reasonably convenient to avail and repay due to the relatively low Loans against Property interest rate.