Myth 1 – Only the Wealthy Can Access LAP
It’s widely believed that Loan Against Property (LAP) is only available to the rich. This is not true.
In reality, anyone who owns a residential, commercial, or even industrial property—regardless of income level—can apply.
Leading Indian banks like HDFC and SBI offer LAP with minimum property values starting as low as ₹20–30 lakh. These are accessible options for even lower-middle-class families and small business owners.
Myth 2 – A High CIBIL Score Is Mandatory
A widespread myth is that you must have a CIBIL score above 750 to get approved.
In reality, lenders assess property value, income stability, and title clarity, not just credit score. Many NBFCs and fintech lenders even offer LAP to borrowers with scores as low as 600, depending on other eligibility factors.
Even CIBIL itself confirms that a good score helps, but collateral-based loans have more relaxed requirements.
Myth 3 – LAP Has Very High Interest Rates
Another common belief is that LAP interest rates are extremely high—often 15–20%. This is outdated.
According to RBI’s lending rate tracker, most banks in India offer LAP interest rates between 8% and 11.5%, which are much lower than credit cards or personal loans.
For example:
Myth 4 – Loan Against Property Takes Weeks to Approve
Many assume LAP takes 3–4 weeks to process due to property verification. That’s no longer true.
Today, banks use automated valuation tools and e-verification to speed up the process. If documents are in order, LAP can be approved in 7–10 working days.
HDFC’s official LAP portal lets users check eligibility and upload documents digitally.
Myth 5 – You Lose Property Ownership After Availing LAP
False. The property stays in your name throughout the loan term.
The bank only creates a lien on the property as security. As long as EMIs are paid on time, you retain full rights to use, rent, or sell the property (with NOC from the bank).
Foreclosure only happens in case of serious defaults, as per norms under the SARFAESI Act, 2002.
Myth 6 – LAP Is Only for Business Purposes
Some believe LAP can only be used for funding business expansion. This is incorrect.
Most Indian lenders allow LAP usage for:
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Higher education
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Medical emergencies
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Marriage expenses
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Debt consolidation
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Property renovation
Refer to official policy pages like Bajaj Finserv’s LAP eligibility to view all permitted use cases.
Myth 7 – No Tax Benefits with LAP
While personal LAP use doesn’t offer tax deductions, there’s an exception if funds are used for business.
If LAP is used for business-related expenses (e.g., machinery purchase, working capital), interest paid can be claimed as a deductible under Section 37(1) of the Income Tax Act.
Myth 8 – Only Salaried Professionals Are Eligible
False again. Most lenders provide LAP to:
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Salaried individuals
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Self-employed professionals
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Business owners
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Freelancers (if income is verifiable)
See IDFC FIRST Bank’s LAP profile showing wide eligibility categories.
Real Example – EMI Calculator for LAP
Want to estimate your EMI?
Use the official HDFC Loan Against Property EMI Calculator for instant EMI breakdown, amortization schedule, and interest summary based on loan amount and tenure.
FAQs – Loan Against Property Myths
1. Is a CIBIL score below 700 acceptable?
Yes, depending on property value and income. Many NBFCs offer flexible LAP options. See CIBIL’s guide on how collateral affects credit requirements.
2. Can LAP interest be claimed for tax benefits?
Yes, if used for business. Read Income Tax Department’s deductions under Section 37(1).
3. Is LAP cheaper than personal loans?
Usually yes. LAP interest rates (8–11%) are lower than unsecured personal loans (12–24%).
4. Can I apply for LAP online?
Yes, via portals like HDFC, SBI, or ICICI Bank.
Final Word
Avoiding Loan Against Property myths can save you time, money, and stress. LAP is a powerful financing tool—safe, flexible, and accessible when you understand the facts. Use trusted sources, compare rates, and apply only via secure, official lender portals.
