What is a Loan Against Property (LAP)? Benefits & Interest Rates

A loan against property, or LAP, is a secured loan where you pledge a property you own as collateral and borrow against its market value. The property can be residential or commercial, and it stays yours throughout. You continue to own and use it while you repay the loan.

Because the loan is backed by an asset, lenders can usually offer a larger amount at a lower interest rate than an unsecured loan of the same size. With Sammaan Capital, you can take a loan against property for business and non-residential property needs rather than personal spending.

When you apply, the lender assesses two things together: the market value of your property and your ability to repay. Based on this, you are offered a loan amount that is a share of the property's value, along with a tenure and an interest rate. Your property documents stay with the lender as security until the loan is fully repaid, after which they are returned to you.

You repay the loan in monthly instalments, or EMIs, each consisting of principal and interest, similar to a home loan. The amount you can borrow depends on the type and value of your property and on your income or business cash flow.

One of the strengths of a loan against property is its flexibility, which makes it well suited to larger, planned needs. At Sammaan Capital, the funds are intended for business and non-residential property purposes, including:

• Expanding your business: Fund a new location or extra capacity as your business grows.
• Managing working capital: Meet day-to-day running costs or bridge seasonal gaps in cash flow.
• Consolidating business borrowings: Bring higher-cost business debt into a single, more manageable loan.
• Buying a non-residential property: Purchase commercial or other non-residential premises for your business.

Because it draws on an asset you already own, a loan against property can often meet these needs at a lower cost than an unsecured business loan.

Here are the main features of a loan against property at Sammaan Capital.

• A substantial loan amount: You can borrow up to ₹10 crore*, depending on your property value and eligibility.
• Funding against your property value: Financing can go up to 65%* of the property's market value, varying by property type.
• A long repayment tenure: You can repay over a tenure of up to 15 years*, which helps keep your EMI comfortable.
• A competitive interest rate: A loan against property starts from 9.75%* p.a., usually well below unsecured loan rates.
• Continued use of your property: You keep and use your property throughout the loan, since only the documents are held as security.

For the right need, a loan against property can be one of the most cost-effective ways to raise a large sum.

• Lower cost than unsecured borrowing: Because the loan is secured against your property, the interest rate is typically much lower than on an unsecured business loan.
• Access to a larger amount: The value of your property can support a far bigger loan than most unsecured options allow.
• Comfortable EMIs over a long tenure: Spreading repayment over several years keeps the monthly outgo manageable alongside your other commitments.
• You retain ownership: You continue to own and use your property while you repay, so it keeps serving you even as it funds your plans.

Interest rates on a loan against property are a little higher than on a home loan, since the funds are not used to buy the mortgaged property itself, but they are usually well below the rates charged on unsecured loans. At Sammaan Capital, a loan against property interest rate starts from 9.75%* p.a.

The exact rate you are offered depends on your profile, including your credit score, your income or business cash flow, the type of property, and the loan amount and tenure. A healthy credit score, generally around 675 or above, can help you qualify for a better rate. A loan against property carries a floating rate of interest, which the lender may revise from time to time in line with market conditions and its own commercial assessment. Before you apply, it is worth using a loan against property EMI calculator to see how the rate and tenure affect your monthly instalment.

Interest rates, fees and charges are indicative, subject to change at the company's discretion, and vary by applicant profile and credit assessment.

A loan against property is available to self-employed professionals, business owners, and salaried individuals, provided you own a residential or commercial property and the funds are for business or non-residential property purposes. The lender looks at your ability to repay alongside the value of your property. At Sammaan Capital, the main things considered include:

• Property ownership: You should own the residential or commercial property you wish to pledge, with a clear and marketable title.
• Income or business stability: A steady income or an established business, generally with a few years of continuity, supports your application.
• Credit score: A score of around 675 or above is generally preferred, and a higher score can help you secure a better rate.
• Age: You should fall within the applicable entry and maturity age range, which varies by profile.

Eligible self-employed applicants may be considered under applicable surrogate or programme-based income assessment routes, subject to programme-specific eligibility, documentation and credit norms.

The exact list depends on your profile and property, but you should keep the following documents required for a loan against property ready to make the process smoother.

• Identity and address proof: Standard KYC documents, such as your PAN and address proof.
• Income and bank statements: Recent income documents and bank statements that show your repayment ability.
• Business and registration documents: For self-employed and business applicants, the relevant financial and registration papers.
• Property documents: The title and ownership papers of the property you intend to pledge.

If you already have a loan against property with another lender and feel your rate is on the higher side, you can move the outstanding balance to Sammaan Capital through a Balance Transfer. This shifts your existing loan to Sammaan, potentially at a more competitive rate, which can lower your EMI or reduce your interest cost over the remaining tenure.

If you need additional funds for your business at the same time, a Balance Transfer with Top-Up lets you borrow a little more over and above the transferred amount, all within a single loan. It is worth comparing the likely savings against any applicable charges before you decide.

A loan against property is a practical way to raise substantial funds against an asset you already own, usually at a lower cost than an unsecured loan and over a comfortable tenure. If you have a property and a clear business need, a little time spent weighing the amount, rate, and tenure that suit you will put you in a strong position to borrow with confidence.

* Interest rates, fees, charges and eligibility criteria are indicative, subject to change at the company's discretion, and vary by applicant profile and credit assessment. Please refer to the latest terms and conditions before applying.