A property loan (also known as a loan against property or LAP) is a type of secured loan where you pledge your existing property to get funds from a bank or financial institution. This loan is perfect when you need a large sum of money for purposes like business expansion, home renovation, education, or even a medical emergency. The biggest advantage? You don’t need to sell your property; you can still use it while it helps you access cash.

Benefits of a Property Loan:

Large Loan Amount:

Since a property loan is secured by collateral (your property), lenders are usually willing to offer a substantial loan amount—often up to 70% of the property’s market value.

Lower Interest Rates:

Compared to unsecured loans like personal loans, property loans come with much lower interest rates since the lender has the security of your property. This makes the monthly repayments more affordable.

Flexible Use of Funds:

The best part of a property loan is that there are no restrictions on how you use the funds. You can use it for personal reasons, business purposes, or any other financial need.

Longer Repayment Tenure:

Property loans offer a longer repayment period, sometimes up to 15-20 years, which means your monthly EMI can be kept relatively low and manageable.


Property Ownership:

Even though you’re taking a loan against it, you don’t lose ownership of your property. You can continue using it as you normally would.


Tax Benefits:

If the loan is used for business purposes, the interest paid can be claimed as a business expense and is tax-deductible.

Eligibility Criteria for a Property Loan:

Before approving a loan against property, lenders will check if you meet certain eligibility conditions. Though specific criteria may vary by bank, here are some common factors:

Type of Property:

You can take a loan against residential, commercial, or industrial property. The property must be fully constructed and have clear title deeds. Vacant land or agricultural land is generally not accepted.


Age of Applicant:

The applicant (whether salaried or self-employed) typically needs to be between 21 and 65 years of age at the time of applying for the loan.

Income and Repayment Capacity:

Your income plays a key role in determining your loan eligibility. The higher your income, the greater the loan amount you can qualify for. Lenders also assess your ability to repay the loan based on your income and existing liabilities.

Credit Score:

A good credit score (usually 650 or higher) is important for securing a loan against property. It shows that you’ve been responsible with past debts and can handle future repayment commitments.

Property Valuation:

The loan amount will depend on the market value of the property you’re pledging. Lenders usually offer between 50% to 70% of the property’s current market value as the loan amount.

Employment Status:

For salaried individuals, steady employment in a reputed company boosts eligibility. For self-employed individuals, a stable business or professional practice is a plus.

Existing Debt:

Lenders will check your existing debts and financial commitments. If you already have significant liabilities, it might reduce the loan amount you qualify for.

Documents Required for a Property Loan:

When applying for a loan against property, you’ll need to submit certain documents to verify your personal and financial details. Below is a general list of the documents required:

Proof of Identity:

Aadhaar card, PAN card, passport, voter ID, or driving license.

Proof of Address:

Utility bills (electricity, water), ration card, passport, or Aadhaar card can serve as valid address proof.

Income Proof:

For salaried individuals: Last 3 months’ salary slips, 6 months’ bank statements, Form 16, and income tax returns (ITR).

For self-employed individuals: ITRs for the last 2-3 years, business financial statements, and bank statements.

Property Documents:

Title deed of the property (to prove ownership).

Sale deed and any other legal documents related to the property.

No Objection Certificate (NOC) from the builder or housing society (if applicable).

Employment Proof:


For salaried employees: A letter from your employer confirming your employment details.

For self-employed individuals: Business registration certificates, partnership deeds, or other proof of your professional practice.

Proof of Age:

Birth certificate, Aadhaar card, passport, or any other document proving your age.

Loan Application Form:

The completed loan application form along with passport-size photographs.