LAP Types

There are various ways in which a Borrower can raise Equity against his property. It can be in the form of Term loan or Overdraft as follows:

Features:

This is the most basic and common type of Home Equity loan which has following features:

♦  Fixed term loan wherein a fixed EMI is paid every month and the principal gets amortized over the loan period

♦  EMI is paid on monthly reducing basis, which means principal gets reduced gradually every month

♦  Taken to fund a one time Investment / Expenditure requirement.

 

Purpose:

The funds are paid in the hand of the property owner and can be used for legitimate purpose as follows:

♦  Business Expansion for working capital or for buying machinery / raw materials etc.

♦  Children Education 

♦  Marriage Expenditure

♦  Acquiring any long term capital asset like Car, household goods etc.

♦  Any Medical expenditure

♦  Funding your dream vacation

♦  Any other capital expenditure

 

Maximum loan:

♦  Upto 70% of the market value of property depending on Bank policies and based on the repayment capacity of the borrower

 

Maximum Term:

♦  Upto 15 years depending on borrower profile and Bank policies

 

Property Type: 

♦  Residential or Commercial or Industrial properties or even vacant plots can be taken as a security. Usage of the property can be self-occupied or in self-usage, let-out or vacant as the case may be.

 

Rate of Interest:

♦  All Banks link their interest rates to external Benchmark rate of RBI - Repo Rate

♦  At present Home Loan rates vary from 9% to 11% depending on Loan Amount, CIBIL Score, Income Profile and the Lender.

Click Here to know the ongoing LAP Rates....

Features:

This is a unique product which has advantages of both LAP term loan and a Bank OD limit. It has following features / benefits over a normal term loan:

♦  Rather than giving an upfront loan disbursement, an OD limit is set in the lender's Bank A/c

♦  Interest is charged only on the actual amount utilized as per daily outstandings similar to a Bank OD limit. Total interest is debited on the last day of the month

♦  Normal current account cheque book is issued, through which borrower can withdraw / deposit funds on day to day basis

♦  Dropline OD limit is set which can be monthly dropline or annual dropline

 

Maximum loan:

♦  Upto 70% of the market value of property and based on the repayment capacity of the borrower

 

Maximum Term:

♦  Upto 15 years depending on borrower profile and Bank policies

 

Property Type: 

♦  Residential or Commercial or Industrial properties can be taken as a security. Usage of the property can be self-occupied or in self-usage, let-out or vacant as the case may be.

 

Rate of Interest:

♦  All Banks link their interest rates to external Benchmark rate of RBI - Repo Rate

♦  Property OD usually attracts 0.5% - 1% higher rate as compared to a Normal LAP. 

 

Click Here to know the ongoing Property Overdraft Rates....

Features:

LRD or Loan against Rent Receivables (LARR), as the name suggests is a loan scheme in which a borrower can take loan against his rental income by mortgage the rented property. The borrower pledges the future rental earnings from the rented property to the bank for loan repayment. It has following features:

♦  Loan available against rental income from commercial property

♦  No other income proof required.

♦  Suited to persons having rental income as primary source of income

♦  Also suited to builders / investors wanted to raise additional capital against existed rented property

♦  Rental income is securitized in favour of the lender

♦  Escrow Account is opened in the lender's bank. Rental income is credited in it and EMIs are recovered through ECS

 

Maximum loan:

♦ Upto 50% of the market value of property and based on the net rental credits

 

Maximum Term:

♦ Upto 10 years depending on the balance lease period

 

Property Type: 

♦ Property should be Commercial or Industrial in nature

 

Rate of Interest:

♦  All Banks link their interest rates to external Benchmark rate of RBI - Repo Rate

♦  LRD usually attracts the same or lesser rate as compared to a Normal LAP.

 

Click Here to know the ongoing Property Overdraft Rates....

Reverse Mortgage, as the name implies means opposite of a normal LAP. 

This loan product is available for senior citizens who have built loan-free house property for themselves but do NOT have a regular income to support their lifestyle. This loan product allows them to lead a normal life even after retirement and after they stop earning their regular income. The senior citizen can continue to stay and own this house property and still raise a loan on this property without selling. It enables them to meet their day-to-day living expenses for food, clothes, house repairs, taking a vacation and other usual lifestyle expenses. 

 

Features:

♦  Minimum age for availing Reverse Mortgage loan is 60 years (Post-Retirement). 

♦  The person or spouse should be the owner of a property without any loan on it. It cannot be taken on ancestral property or on any other family member’s name.

♦  The loan payments can be done by the Bank to the senior citizen as a lump-sum payment or as regular monthly payments.

♦  The lump-sum loan can be utilized for one-time expenses like Medical, Home repairs, consumer durable goods, or any other asset.

♦  The lump-sum payment, regular monthly payments along with the interest gets compounded and the loan amount keeps on increasing. 

♦  At the end of the loan tenure, the senior citizen can pay-off the loan either from his own sources or by selling off the property.

♦  If during the loan tenure the senior citizen expires, then either the legal heirs can pay-off the Bank loan dues and takeover the property or the Bank will be required to sell the property, recover its loan dues and pay balance sales consideration if any to the legal heirs.

 

Maximum loan:

♦  Upto 60% of the market value of property can be granted as a Reverse Mortgage loan

 

Maximum Term:

♦  Upto 10 - 15 years. Many Bank restrict the loan maturity age to 80 years

 

Property Type: 

♦  Only self-occupied Residential properties can be taken as security

 

Rate of Interest:

♦  All Banks link their interest rates to external Benchmark rate of RBI - Repo Rate

♦  Reverse Mortgage usually attracts the same rate as compared to a Normal LAP.

Click Here to know the ongoing Property Overdraft Rates....

 

Fees & Charges:

♦  The fees payable is also similar to a normal LAP as mentioned here.

 

Stamp Duty Charge -

♦  Most Banks get the reverse mortgage registered with the local sub-registrar office, which means incurring a stamp duty charge as applicable to the State where the property is located.

 

Prepayment Penalty:

♦  Prepayment Penalty or Foreclosure charges are NIL as these are taken by individual senior citizens other than for Business purposes.

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