If you are sitting on a valuable asset in the form of a property, never worry about your loan applications being rejected.

Banks offer a product called loans against property (LAP), which gives you access to finance, on the basis of the property that you hold.

Simply put, a loan against property is what it actually connotes ? a loan given or disbursed against the mortgage of property.

This is unlike a personal loan, which is disbursed to an individual, no questions asked and no security required. This loan is given as a certain percentage of the property?s market value (usually around 40 to 60 per cent). But the threshold amount too is generally defined by most lending institutions.

The property offered can be either residential or commercial. It could be freehold or leasehold and could be self occupied or leased out to acceptable entities. However, the owner should have a clear and marketable title to the property.

But like personal loans, there are no restrictions on the purpose for which a LAP can be used. It can be used to meet marriage expenses, pay off huge medical bills or fund your child?s higher education. You could even use this loan to meet your travel expenses, if you plan an expensive holiday with your family.

A LAP can also be used to purchase a new house or to improve the condition of your current residence. In fact, you can use this loan for almost anything since it has a sound security backing.

Despite the immense advantage of a no-holds-barred loan in line with a personal loan, LAP works out easier on the pocket. Personal loans are usually issued at interest rates of 12 to 30 per cent.

LAP is issued in the 9.75-12.50 per cent range. A lower rate is charged because the lender has a security in the form of the housing mortgage.

The tenure of a LAP is usually longer than that of a personal loan. Generally, LAP is given for a maximum tenure of 10 years. HDFC and ICICI Bank offer their home equity loans with a maximum repayment period of 15 years.

The criteria for LAP are the same as those for any home loan. Part pre-payment as well as full pre-payment of LAP is allowed by most lenders and many do not levy extra charges on prepayment.

Nevertheless, do keep in mind some points while applying for a LAP. Some financial institutions make LAP available only under the floating rate, linked to the benchmark prime lending rates and fixed rate loans are off limits. And in the scenario of slowly rising interest rates, borrowers need to enquire before finalising a LAP from lending institutions.

Furthermore, do keep a track of the associated costs. All the lending institutions charge a processing and administration fee ranging from 0.5-1 per cent, excluding the service charges. Bank of Baroda has waived these fees till December 31.

Finally, the technical inspection report of your property needs to be in order, which qualifies the merit of the property to be mortgaged. Otherwise the LAP could be rejected.

Some institutions require a minimum market value of the property to give the loan. HDFC requires the value to be Rs 5 lakh for residential and Rs 7.50 lakh for a commercial property.

While security for the loan is a first mortgage of property against which the institution has advanced the loan, they may request for an additional, interim, collateral liquid security in the nature of shares and fixed deposits on a selective basis.