Loan Against Property versus Loan Against Securities
| Loan against property (LAP) | Loan against security (LAS) |
| Instrument mortgaged: property; commercial or residential. | Instrument mortgaged: mutual funds, National Savings Certificate, Kisan Vikas Patra or LIC policy or fixed deposits and jewellery. |
| Processing fee: Around 1%. | Processing fee: Minimum 0.25%. |
| Margin required: Around 15-20%. | Margin required: Around 15-20% of the value of the instrument. |
| Salaried employees / professionals as well as self-employed and other income tax assesses for last 3 years with a minimum gross annual income of Rs. 60000 are eligible for the loan. Salaried individuals can get up to 36 times of net monthly income as a loan. Others can avail up to 3.5 times the net annual income (average of last 3 years) as a loan. | Possession of the instrument to be mortgaged justifying the value of the loan applied for. |
| Loan tenure: Up to 15 years | Loan tenure: Repayment within the maturity period of the instrument mortgaged for the loan. You can get loan against gold jewellery which needs to be repaid at the end of a fixed loan tenure which is pre-determined. For instance, State Bank of Travancore offers gold loans for 6-12 months. The tenure can be extended based on the customer’s request and the banks decision regarding the same. |
| Documents required:
Salaried
Professional / self-employed
|
Documents required:
|
| Maximum loan amount: Up to 40-60% of the value of property as a loan against property. | Maximum loan amount: In most cases, up to 50-80% of the value of the security mortgaged (if the security gives fixed returns)
If it gives variable returns, s, the maximum loan amount is 40-60% of the value of the security. Note: The loan amount is based on the type of the instrument to be mortgaged. In case of loan against jewelry, it depends on the valuation. |
| Interest rates: 13-17%. | Interest rates: 12-15%. |
| Overdraft facility available. | Overdraft facility available. |
