What is LAP - Full Form, Meaning & Benefits
Sep 16, 2024 | 4 mins read
A Loan Against Property (LAP) allows you to unlock the value of your property by using it as collateral to secure a loan. Understanding the associated Loan Against Property fees, processing charges and other costs is essential. Knowing these charges upfront ensures transparency and better financial planning. Use the Loan Against Property EMI Calculator to evaluate your EMI and total loan cost.
Here are the various fees and charges you might encounter while applying for a Loan Against Property:
1. Processing Fee
What It Is: A one-time fee charged for processing your loan application.
Purpose: Covers administrative expenses involved in evaluating your application.
2. Legal and Technical Charges
Legal Charges: Fees for verifying the property’s legal documents to ensure clear ownership.
Technical Charges: Costs associated with property valuation to assess its eligibility.
3. Stamp Duty and Registration Charges
What It Is: State-specific duties and registration fees applicable to property-backed loans.
Purpose: Ensures the legality of the loan agreement under government regulations.
A) Late Payment Penalty
What It Is: Penalty for not paying EMIs on time.
Typical Rate: 2-3% of the overdue EMI amount.
Impact: Affects your credit score and increases repayment costs.
B) Conversion Fee (Interest Rate Change)
What It Is: Charges for switching from fixed to floating interest rates or vice versa.
Typical Cost: ₹ 5,000 to ₹ 10,000 or a percentage of the outstanding loan amount.
C) Other Miscellaneous Fees
Document Retrieval Fees: Charged for providing duplicate loan statements or documents.
Statement Charges: Fees for additional account statements.
| Processing Fees / Documentation Charges: | Up to 3% of sanctioned amount + applicable taxes (this is inclusive of Login Fee) |
| Login Fees: | Up to ₹ 5000 (inclusive of applicable taxes)(non refundable) |
| Repayment / EMI Bounce Charges: | As shown in the table below |
| Loan sanction amount (in INR) | Charges in (in INR) |
| < ₹ 5 Lakh | ₹ 500 |
| ₹ 5 Lakh – ₹ 50 Lakh | ₹ 1000 |
| > ₹ 50 Lakh – ₹ 2 Crore | ₹ 1500 |
| > ₹ 2 Crore | ₹ 2000 |
| Late Payment Charges/ Penal Charges: | 2% per month on overdue EMI + applicable taxes |
| *LPC revised from 3% to 2% per month on overdue EMI w.e.f. 4th Dec 2023 | |
| *Taxes applicable on LPC w.e.f. 1st Apr 2024 | |
| Annual Maintenance Charges (applicable only for Dropline Overdraft and Hybrid Overdraft): | Up to 0.25% + GST of Dropline Limit available at start of each year (i.e. first on 13th Month and then every anniversary thereon) |
| Duplicate NOC Charges: | First 3 paper copies - free of cost |
| ₹ 250/- + applicable taxes | |
| Repayment Swap Charges (per swap): | ₹ 500/- + applicable taxes (applicable only for branch walk-ins) |
| Charges for documents like Statement of Account / Repayment Schedule /Foreclosure Letter & Welcome Kit: | Physical copy at a charge of Rs.500/- + GST per statement/letter /certificate. Digital is NIL |
| Valuation Charges: | As per actuals |
| Documentation Charges: | As per actuals |
| Cash Pickup Charges: | Nil |
| Interest Rate Conversion Charge: | Up to 0.5% on Balance Loan Amt + applicable taxes (or) Minimum Rs.10,000/– whichever is higher |
| List of documents: | ₹ 300/ – +applicable taxes |
| Providing photo copies of the documents (property & others): | ₹ 500/ – +applicable taxes of the documents (property & others) |
| Charges incurred by LTF for initiating action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002: | Issue of Loan Recall Notice = ₹ 500/ – |
| Issue of Demand Notice = ₹ 1,000/ – | |
| Issue of Possession Notice = ₹ 2,000/ – | |
| Applying District Magistrate Order = ₹ 8,000/ – | |
| Taking Physical possession = ₹ 20,000/ – | |
| Actual cost incurred will be debited for expenses pertaining to Publication of Possession Notice/ Publication Demand Notice/Publication of Sale cum Auction Notice | |
| Legal / Recovery Charges (Other than pertaining to SARFAESI): | As per actuals |
| Loan Cancellation Charges: | ₹ 5000/ – + applicable taxes |
| Recovery of proportionate actual expenses from disbursement date(s), from individual borrower(s): | LAP – Up to 1% of total disbursed loan amount + applicable taxes in case of closure within 24 months |
| Foreclosure / Full Prepayment Charges: | For Individual / Non-Individual Borrowers – |
| Floating Rate – Nil Charge | |
| Nil Charges where end use is not for business/commercial purpose For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on principal outstanding + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on principal outstanding + applicable taxes | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on principal outstanding + applicable taxes | |
| Pre-payment Charges – Loan Against Property: | Floating Rate – |
| Nil Charges where end use is not for business/commercial purpose. For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Partial/Pre-payment amount + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on Partial/Prepayment amount + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Pre-payment amount + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Pre-payment amount + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Prepayment + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Prepayment amount + applicable taxes | |
| For Individual Borrowers – | |
| Floating Rate – | |
| Nil Charges where end use is not for business/commercial purpose For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on Partial/Prepayment amount + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Prepayment amount + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Prepayment amount + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Prepayment amount + applicable taxes | |
| Foreclosure / Full Prepayment Charges – for Dropline Overdraft / Hybrid Overdraft | Floating Rate – |
| Nil Charges where end use is not for business/commercial purpose. For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on Dropline Limit + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| For Individual Borrowers – | |
| Floating Rate – | |
| Nil Charges where end use is not for business/commercial purpose For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 2% on Dropline Limit + applicable taxes | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| Pre-payment Charges – – for Dropline Overdraft / Hybrid Overdraft: | Not allowed till the day after the First Due Date. No Charges applicable from the day after the First Due Date Part pre-payment of Loan toward limit reduction is not available |
| Switch Charges (Switch from floating interest rate to a fixed interest rate): | Up to 1% on principal outstanding loan amount + applicable taxes (or) minimum Rs.10,000/– whichever is higher |
| Non-Compliance Charges: | Up to 1% p.a. of principal outstanding loan amount + applicable taxes |
| Breakup between Principal & Interest: | As per Repayment Schedule |
| Example of SMA/ NPA classification: | More particularly mentioned under “Classification of Assets” under the head “Miscellaneous” |
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