How to Finance the Purchase of a New Home Using Loan Against Property

buying a home using a LAP

In India, people like to save up for their dream home as they consider it not only as a great investment option but also as a status symbol. Nevertheless, people want to own a home, based on their capabilities and always find a way to finance their new residence/property. Owing to the demand in the market, both private and public lending institutions have come up with multiple financial instruments. One of the most natural way to finance a new home is a home loan by which a borrower can avail finances to fund the same. However, note that borrowers with lower credit scores might face issues in availing home loans, and hence they look out for alternative options. Also, note that home loans cannot be completely flexible when it comes to meeting the requirements.

Loan Against Property For the Purchase of a New Home

Loan against property, as the name states are availing funds from a lender by pledging the property/asset. LAP caters to various financial requirements of a borrower and can also help in the purchase of a new property as an alternative to home loans. Experts claim that LAPs are one of the fastest-growing instruments in the lending space, and even banks/NBFCs favour them due to their secure nature.

How to Fund Your New Home with LAP?

Leveraging LAPs for purchase of a new home needs to have a tactical approach. Read along to see the pointers which can help in your decision to take a LAP to finance a new property. 

  • Assess your financial requirement as a primary step. You might want to calculate all the costs related to the purchase and submit the requirements to the lending institution.
  • The second step in the process would be an evaluation of your property by the lending institution so that the lender can provide you with an estimate of the loan amount that can be approved. Typically, the lender can provide a loan amount upto 50%-60% of the market value of the property. An online EMI calculator is a great way to know your loan against property eligibility. The loan amount can even go higher depending on the financial institution. Based on your credit score, you can also negotiate for better interest rates and principal amount
  • The third step would be providing the necessary documentation to avail the loans. The documentation would be minimal due to the secured nature of the LAP. However, the essential documentation would be KYC documents, property documents, income proof documents, etc.
  • The final step would be the processing of the loans by the lending institution. Based on several factors, the lender would decide on the principal amount, interest rate, tenure, repayment terms and so on. Post completion of the verification process, the loan amount would be disbursed to the borrower.


Although home loans are specifically designed to meet the requirements of the new home enthusiast, loan against property would serve as an excellent alternative for the borrower depending on his/her current credit score



James Williams
James is our Lead Content Publisher here at Feeds Portal. He has worked with many top websites over the years, including BuzzFeed.

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