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Loan Against Property (LAP), also known as mortgage loan, allows consumers to raise funds by leveraging their residential, commercial or industrial properties. Like unsecured personal loans, Loan against property (LAP) can also be availed for meeting both personal and business needs other than speculative purposes. Banks and HFCs offer loan against property for tenures of up to 20 years.
The loan amount for LAP can go up to 75% of the property’s market value, depending on the lender and the credit profile of the borrowers. Many lenders also offer Lease Rental Discounting (LRD) facility, which allows consumers to avail loan by pledging the rental receipts of their tenants.
Following are the features and benefits of loan against property:
| Lender | Interest Rates (p.a.) | Processing Fees |
| Bank of India | 10.10%-12.85% | Up to 1% of loan amount (Rs 5,000 - Rs 50,000) |
| Bank of Baroda | 9.70% - 18.60% | Up to 1% (Rs 8,500 upfront - Rs 75,000) |
| Bank of Maharashtra | 10.45% - 11.95% | 1% of loan amount |
| Federal Bank | 12.60% onwards | 1% of the limit sanctioned with a minimum of Rs. 3,000 |
| HDFC Bank Limited | 9.50% - 13.30% | Up to 1% of loan amount (minimum Rs 7,500) |
| ICICI Bank | 10.85% - 12.50% | Up to 1% of loan amount |
| IDFC First Bank | 9.25% onwards | Up to 3% of loan amount |
| Indian Bank | 9.70% - 12.85% | 1% of loan amount or Rs 10,000 whichever is higher |
| Sammaan Capital (Formerly known as Indiabulls Housing Finance) | 9.75% onwards | 1.25% onwards |
| Kotak Mahindra Bank | 9.50% onwards | Up to 1% of loan amount |
| L&T Finance | 9.50% onwards | Up to 2% of loan amount |
| LIC Housing Finance | 9.50% - 11.55% | Up to 1% of loan amount |
| PNB Housing Finance | 10.40% - 14.00% | 0.75% of loan amount (Max. Rs 1 lakh) |
| State Bank of India | 10.00% - 11.30% | 1% of loan amount (Max. Rs 50,000) |
| Tata Capital | 9.00% onwards | Up to 1.25% of loan amount |
| Union Bank of India | 10.45% - 13.10% | Up to 1% of loan amount (Min. Rs 5,000 & Max. Rs 1 lakh) |
| UCO Bank | 10.85% - 12.00% | 0.50% of loan amount (up to Rs 2 lakh) |
Note: Interest Rates as of 12 December 2024
The eligibility criteria for availing LAP varies across lenders, below are some general conditions that must be fulfilled to apply for loan against property:
Before applying for mortgage loan, use Paisabazaar’s loan against property EMI calculator to know how much EMI you can afford on a certain loan amount, interest rate and tenure. The online EMI calculator gives accurate results instantly and also displays total interest payable, total principal payable and amortization schedule to help you understand your loan repayment better.
Also Read: Documents Required for Loan Against Property in detail
Below are some of the general fees and charges that may be applicable to your mortgage loan.
| Processing Fees | 1% - 2% of loan amount |
| Part Prepayment Charges | Floating Rate: Nil Fixed Rate: Up to 4% on outstanding principal |
| Foreclosure Charges | Floating Rate: Nil Fixed Rate: Up to 2% on outstanding principal |
| Penal Interest | Usually at 24% p.a. (2% per month on the overdue installment/s) |
Step 1: Provide basic details such as your mobile number, loan amount, property location, employment type, etc.
Step 2: Compare and apply from the list of offers.
Step 3: Wait for the loan experts to get in touch with you.
Loan against property is a secured loan option wherein borrowers avail financing by mortgaging their commercial or residential property. Borrowers can use the loan proceeds for any purpose other than any speculative activities.
The eligibility for availing loan against property would primarily depend on age, property location, features, repayment capacity, credit score, occupation profile, etc.
For most consumers, the best bank/HFC for availing loan against property would be the one that offers the lowest interest rate as it would help them in saving on their overall interest cost. However, other features like loan tenure, LTV ratio, processing fees, pre-payment charges (in case of fixed rate LAPs) and loan disbursal time should also be factored while comparing various LAP options.
A LAP borrower secures loan from a bank/NBFC/HFC by mortgaging his/her property and repays it over the loan tenure. Just like any other secured loans, the lender would foreclose on the mortgaged property in case of loan default.
Mostly, the tenure of a loan against property goes up to 20 years. However, this may vary from one lender to another.
A few benefits of loan against property are:
A co-applicant for a loan against property is mandatory only when the property being mortgaged is owned by more than one person. In such a case, all co-owners of the property need to apply as co-applicants.
Different lenders have different criteria for the type of property to be accepted against a mortgage loan. However, mostly all lenders accept the residential, commercial or industrial property. It is important to note that the physical condition and age of the property may affect its acceptance by the lenders.
Banks/ HFCs usually offer loan against property for tenures of up to 15 years with many lenders offering maximum loan tenures of 20 years or more. For example Godrej Capital offer loan tenures of up to 30 years and 25 years, respectively.
Yes, there are several financial institutions that offer loan against property to NRIs.
Loan against Property allows individuals to raise funds by mortgaging their residential/commercial/industrial property, whereas home loan helps individuals buy/build a new house or extend/renovate an existing one.
Not paying your Loan against Property EMI will incur late fees, penal interest and reduction in your credit score. Loan, if not paid partially/fully within 90 days, will be classified as Non-Performing Asset (NPA), which may lead your lender to initiate recovery actions under the framework of the SARFAESI Act, 2002.
