How does LAP differ from other loans?

A loan against property (LAP) allows you to avail of a loan by placing your property as collateral. The key difference between LAP and other loans like personal loans, gold loans, etc., is that it offers a higher loan amount. While personal loans may allow up to ₹10 lakhs (or more), LAPs can usually provide loans up to ₹10 crores (in some cases, even higher) based on the property value.

Another major difference is the interest rate. LAP interest rates are generally lower than personal loans but higher than home loans. This is because LAPs are secured by property, but the loan amount is not used to buy property. Additionally, the processing fee and documentation for availing an LAP are more elaborate due to the evaluation of property papers.

Also, LAP eligibility and approval rates are comparatively higher as financial institutions can recover the loan by selling your property if you default. Overall, LAP suits those needing large, long-term loans with an option to place their existing property as security. The higher property value attracts better LAP deals from loan providers.