7 Valuable Tips For Loan Against Property

When you borrow money, you need to have collateral to secure the loan because most banks these days do not give out unsecured loans. One of the best alternatives to unsecured loans is what many people refer to as a loan against property.

If you want to secure any loan, one of the best ways is property valuation. This means that your property or house will be used as collateral for the loan. If you do not repay it on time, the lender can seize your property without further notice, and an auction can be held to sell it off to recover at least some of the amount you owe.

Before you apply for any loan against property, there are certain things that you should keep in mind. They will save you trouble later on during the repayment of your loan.

  • Know your Purpose

Make sure you understand why you need a loan against the property. If you have debts or large expenses, talk to your bank about increasing your limit on credit cards instead of taking out a mortgage for more cash.

If your reasons for applying for a loan against property don’t seem sound, think twice before moving forward with an application for a property loan; it could come back to plague you later down the road. Knowing what you’re getting into will prevent unexpected complications in future scenarios.

  • Define your Loan Amount

You have to start by thinking about how much you need. A quick way to estimate is to look at your monthly cash flow and think about all your fixed expenses – these stay at the same amount each month, like rent, car payments, or insurance. 

Once you have subtracted these out of your monthly income, you can consider a loan against the property, if there is anything left over.

  • Opt for a Long Tenure for Long Against Property

A longer tenure is beneficial for you as it lowers your monthly installments. Also, lower interest rates may be applicable for long-term loans. You can save yourself from tensions about clearing loans in just 2 or 3 years. 

So, to avoid such situations, choose a long tenure for the LAP loan, i.e., 7 to 9 years.

  • Prepay the LAP loan whenever you have Extra Funds

The only advice we can give to a new investor is that you should try to pay back your LAP loan as soon as possible. Make prepayments whenever you have extra funds and pay more than required to get rid of LAP sooner. 

Keep in mind that prepayment will increase the LAP loan interest rate.

  • Avoid Doing Over

This means that you need to ask yourself why you need so much of a big amount to avoid leverage. For example, your property value is 50 lakh, and you are taking 40 lakh of LAP loan; that is too much. It’s also important to understand how much money you need to borrow and when you plan to pay it back.

  • Compare Different Banks’ Charges

Research and compare fees and charges of different banks for loans against property. Look for a bank with minimal processing fees and a low LAP loan interest rate.

  • Ask Questions For Prepayment Penalty

If you choose to pay back a property loan early, lenders levy some hidden charges on making LAP loan prepayment. Ask your bank if there is any penalty or hidden charges. 

It is advisable to clear these questions at the earliest to save yourself from penalty.


A loan against property is an easy way to access credit. However, before you sign on the dotted lines, you should think about the pros and cons of your loan. The tips provided in this post should help you avoid some common mistakes associated with LAP.


I am a content writer and my aim is to provide useful, informative, and easy information to people all over the world.

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