Loan Against Property
What Is a Loan Against Property (LAP)?
NeerCred Team · 4/13/2026
A Loan Against Property (LAP) is a secured loan where you pledge an owned residential or commercial property as collateral to borrow funds, which can generally be used for any legitimate purpose - unlike a home loan, which is specifically for purchasing or constructing property.
How LAP works
You mortgage a property you already own (fully or partly repaid, if it currently has an existing home loan) to a lender, who assesses the property's value and your repayment capacity to determine the loan amount, rate, and tenure. The property remains yours to use and occupy throughout the loan tenure, as long as you continue repaying.
What LAP can be used for
Because it's a general-purpose secured loan, LAP proceeds are commonly used for business expansion, debt consolidation, education, medical expenses, or any other significant financial need - the lender doesn't restrict use the way a home loan (property purchase) does.
Why LAP typically offers better terms than a personal loan
Since the loan is secured against a real, appraised asset, LAP generally carries lower interest rates and offers larger loan amounts and longer tenures than an unsecured personal loan for a comparable applicant profile - the trade-off is that your property is at risk if you default, and the application process involves property valuation and legal verification.
What determines your LAP amount
The maximum LAP amount is governed by the property's assessed value and the lender's LTV (Loan-to-Value) policy for LAP - generally capped around 75% for loans up to roughly ₹75 lakh and around 65% for higher amounts, per prevailing regulatory guidance, alongside your income and repayment capacity assessment.
Who typically uses LAP
Business owners needing working capital or expansion funds, and individuals with a large, defined expense (education abroad, a medical procedure, debt consolidation) who own eligible property and want a lower-cost alternative to unsecured borrowing, are the most common LAP users.
Sources: LAP LTV limits — Dealplexus
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