How Loan Amounts are Determined in LAP

Posted on Thursday, April 18th, 2024 | By IndusInd Bank

A loan against property is an excellent way to access high loan amounts for various financial needs. The quantum of loan one can secure against their property depends on various factors, including the current market value of the property, the applicant’s eligibility criteria, and the loan-to-value ratio. Read on to know more and apply for an IndusInd Bank loan

A Loan Against Property LAP is a secured financial product that allows individuals to leverage the value of their property to obtain a loan. With this secured loan, individuals can meet their needs for additional funds by pledging their commercial or residential property / plot as collateral.

The loan amount can be utilised for diverse purposes such as business expansion, education, weddings, or meeting a medical emergency. Leading banks today offer significant loan amounts at competitive loans against property interest rates. This means you can unlock the hidden value of your property in case of financial exigencies.

That said, several factors affect the loan amount an individual is eligible for. Here, we discuss the various factors on which loan amounts are determined in LAP.

How are Loan Amounts Determined in LAP?

The amount of loan one can secure depends on the market value of the property mortgaged. One can typically secure up to 70-80% of the property’s prevailing market value as a loan against property. Since this is a secured loan product, borrowers can opt for a significantly high loan amount.

Here are the various factors that determine the loan amount in a loan against property.

1. Value of the Property

The primary factor influencing the loan amount one can get as a loan against property is the value of the property offered as collateral. Lenders typically assess the market value of the property and the nature of the property mortgaged before offering a loan to the borrower.

2. Loan to Value Ratio

The valuation of the mortgaged property also helps determine the loan-to-value ratio (LTV), which is the percentage of the property’s value that can be borrowed. Generally, lenders offer LAP with an LTV ranging from 70% to 80%, depending on the type and location of the property.

LTV is determined by a bank based on the prevailing market conditions and its risk policy. For instance, if the lender offers an LTV ratio of 70% on a residential property and the property is valued at INR 80 lakhs, the owner may secure a loan of up to INR 56 lakhs against the property.

The loan-to-value ratio is a critical parameter that directly impacts the loan amount available. A higher LTV allows borrowers to access a larger portion of their property’s value as a loan. However, a lower LTV may be imposed by lenders to mitigate their risk exposure.

3. Loan Eligibility

The borrower’s loan eligibility is another factor that can determine the amount they can avail of as a loan. With IndusInd Bank, salaried and self-employed individuals can secure loan against propertyby fulfilling simple eligibility criteria.

The eligibility criteria for a loan against property with IndusInd Bank are as follows-

Salaried employees

Individuals who hold permanent employment in a PSU, MNC, government/Semi-Government undertaking, listed public limited company, or a reputable private limited company which are CRISIL rated minimum BB+ OR have a turnover over 50 Cr., NRIs. 

Applicant must be at least 21 years old to apply for a loan

At the time of loan maturity, maximum age is restricted to 65 years or retirement age,whichever is lower

Self-employed individuals

1. Individuals who are Doctors, BDS, D.O.M.S, Chartered Accountants, Cost Accountants, Engineers, Architects, CFAs, and Company Secretaries and Masters in Business Administration MBA, PGDM, MMS
2. Any individual who fills out IT returns may apply
3. Applicant must be at least 21 years Income considered / 18 years (Income not considered) old to apply for a loan
4. Applicant’s maximum age at loan maturity should not be more than 70 years (Income considered) / 75 years Income not considered

Secure a Competitive Loan Against Property with IndusInd Bank

IndusInd Bank offers a multipurpose loan against property that helps you easily unlock the inherent value of your property. Whether you want to meet your business finances or fulfil your personal goals, our loan against property is available at competitive interest rates.

Here are the salient features of IndusInd Bank’s loan against property–

• High loan amount
• No restriction to end-use
• Minimal documentation
• Convenient repayment tenures of up to 20 years
• Doorstep services

Apply for a loan against property online at IndusInd Bank today by entering customer details name, mobile & city on Bank’s website.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.