Loan Against Property FAQ

How much loan can one get under Loan Against Property?

The loan value depends upon two factors. Your credit profile and the market value of your property. The credit profile assesses your ability and willingness to repay the loan to the lender. This credit assessment is similar to that done on other loans by checking your income and other liabilities.

Normally lenders have norms as to how much of your property value they can fund. This varies between 40% – 70%. Different lenders have different norms for loan against residential property and loan against commercial property. The market value of the property is assessed independently by the lender and may differ from lender to lender.

I do not have documented financials but I do have the repayment capacity, will I get a loan?

We have various options available under which we can offer you loans i.e. income based and surrogate income based loans. We have the understanding of your business and can determine your loan eligibility accordingly.

Can I apply jointly? Will both our salaries be taken into consideration for calculating the repaying capacity?

Yes, your incomes can be clubbed for the purpose of calculation of the repaying capacity. This can be done either when the property is jointly held or the co-applicant stands as a co-borrower.

How would the value of my property be determined?

The value of the property would be determined through a valuation conducted by the Loan Provider..

If a property is jointly owned by an individual and his/her relatives, can he/she take a loan against this property?

All the co-owners of the considered property need to come in as co-applicants to the loan.

What is the Process of Loan against property?

There are several steps in a loan against property process. It is important that title deeds are in place. A loan against property (LAP) gets you capital based on the value of your property. It is available for both salaried and self-employed persons and against commercial as well as residential property.  All this and, you don’t have to sell your property to raise the capital. It’s all yours to keep if you repay the loan taken

Steps involved in the application process are:
  • Application
  • Documentation
  • Processing
  • Sanctioning of Loan
  • Valuation and Legal Check
  • Disbursement

Do I need to pay a fee to avail a Loan Against Property?

Yes, banks charge a non-refundable processing fee for every LAP application. The processing charge to avail a Loan Against Property is up to 1% of the loan amount plus service tax as applicable

What Property can be considered as collateral for LAP?

You can provide your self-occupied Residential or Commercial property as collateral.

Can I repay my loan earlier than the due date?

Yes you can repay your loan at any time during the loan tenure. However prepayment is not permitted within 6 months from loan disbursal date.

What is the maximum tenure to repay the Loan Against Property?

A Loan Against Rent Receivables can be sanctioned for a minimum tenure of 12 months and a maximum tenure of 108 months. This however depends on the balance lease period and other parameters.

What are the different loan repayment modes?

The loan can be repaid through a Standing Instruction (to debit your HDFC Bank Savings/Current Account for repayment of EMIs) or ECS (to debit your External Bank Account for repayment of EMIs) or by a complete set of Post Dated Cheques.

What are the documents required for Balance Transfer case?

Documents required (other than normal documentation):
  • Welcome Letter / Loan sanction letter from Buy over institution
  • Last 6 month track record statement or applicant’s bank statement from where the loan is being serviced.

What is MCLR?

MCLR stands for Marginal Cost of Funds based Lending Rate. MCLR is the benchmark rate below which the banks cannot provide loans to the customers who are availing loans linked to MCLR.

What are the various types of benchmark under MCLR?

Currently, the Bank has published the following MCLR:
  • Overnight MCLR
  • One-month MCLR
  • Three-month MCLR
  • Six month MCLR
  • One year MCLR
  • Two year MCLR
  • Three year MCLR

Will MCLR be different between Banks?

Yes, MCLR can be different between different banks as it will depend on marginal cost of funds, negative carry on account of CRR, operating costs, tenor premium of respective banks.

When will be the reset date decided for the loan?

The reset period and date will be decided on the date of first disbursement.

How will the reset impact the current rate of interest (ROI) in case the MCLR increases or decreases?

In case of increase in MCLR on the reset date, the ROI will increase which in turn will impact the EMI/tenor of the loan as per Bank’s policy and will be communicated to the customer.

In case of decrease in MCLR on the reset date, the ROI will decrease which in turn will impact the EMI/tenor of the loan as per Bank’s policy and will be communicated to the customer.

It may be mentioned that the spread/margin of the loan would continue to remain the same.