Non-Housing Loans
While home loans are popular for purchasing residential properties, there are several other property-backed loan options available for individuals and businesses. These are known as non-housing loans and include products like Loan Against Property (LAP), Commercial Property Loans, and Commercial Plot Loans. These loans are designed to help borrowers unlock the value of their property for various personal or business needs.
1. Loan Against Property (LAP)
Loan Against Property is a secured loan where an individual mortgages their residential or commercial property to avail funds for personal or professional purposes.
Key Features:
Usage: The loan can be used for business expansion, education, medical expenses, or any other personal requirement.
Property Type: Both self-occupied and rented residential/commercial properties can be pledged.
Loan Amount: Generally up to 60-70% of the market value of the property.
Tenure: Ranges from 5 to 15 years, depending on the borrower’s profile.
Interest Rates: Lower than personal loans due to the secured nature of the loan.
Benefits:
Larger loan amount compared to unsecured loans.
Flexible end-use.
Longer repayment period with lower EMIs.
2. Commercial Property Loan
A Commercial Property Loan is offered to purchase office space, retail outlets, shops, warehouses, or other commercial real estate for business use.
Key Features:
Eligibility: Available to self-employed professionals, business owners, and companies.
Loan Purpose: Buying ready-to-use or under-construction commercial properties.
Loan-to-Value (LTV): Generally up to 60–70% of the property’s value.
Tenure: Up to 15 years, depending on the financials of the applicant.
Interest Rates: Slightly higher than residential home loans due to higher perceived risk.
Benefits:
Helps in expanding or starting a business.
Adds a long-term asset to the company’s portfolio.
Tax benefits may be available under business expense rules.
3. Commercial Plot Loan
A Commercial Plot Loan is a loan taken to purchase land designated for commercial use. It is ideal for those planning to build offices, warehouses, or commercial complexes.
Key Features:
Usage: For purchasing undeveloped commercial land.
Eligibility: Offered to individuals, businesses, and developers with a good financial profile.
Loan Amount: Based on the market value and location of the plot.
Tenure: Usually up to 10–15 years.
Interest Rates: Slightly higher than residential property loans due to the nature of the asset.
Benefits:
Enables long-term investment in commercial real estate.
Suitable for building commercial infrastructure from the ground up.
Conclusion
Non-housing loans such as Loan Against Property, Commercial Property Loans, and Commercial Plot Loans offer powerful financial solutions by leveraging the value of existing or planned property assets. Whether for business expansion, asset acquisition, or large personal expenses, these loans provide flexibility, high funding, and structured repayment options. Borrowers should compare lenders, interest rates, and terms carefully to choose the most suitable product for their needs.
