In today’s world, financial needs can arise at any time—whether it’s for a child’s education, expanding a business, or managing medical emergencies. One of the most popular ways to meet such needs is by taking a loan against property. This guide will help you understand everything about this type of loan—what it is, how it works, its benefits, eligibility, and more.
What is a Loan Against Property?
A loan against property (LAP) is a secured loan where you pledge your residential, commercial, or industrial property as collateral to get funds from a bank or financial institution. Since it is a secured loan, lenders consider it less risky and usually offer better terms compared to unsecured loans.
Why Choose a Loan Against Property?
Choosing a loan against property is often better than taking a personal loan for large expenses. Here’s why:
- Lower interest rates
- Higher loan amounts
- Longer repayment periods
- Continued ownership of the property
Types of Properties You Can Mortgage
You can take a loan against property using the following types of assets:
- Self-occupied residential property
- Rented residential property
- Commercial property (owned or rented)
- Land (in some cases, depending on the lender)
How Does a Loan Against Property Work?
The process is quite simple:
- Apply for the loan with necessary documents.
- Get the property evaluated by the lender.
- Approval is granted based on property value and your income.
- Funds are disbursed after completing legal and verification checks.
- Repay through EMIs over the loan tenure.
The property remains mortgaged with the lender until the full repayment is made.
Interest Rates Offered by Major Lenders
Here’s a comparison of interest rates offered by different financial institutions for loan against property:
| Lender | Rate Range | Fixed / Floating | CIBIL-Based Rates | Women / Special Concessions | Products & Features |
|---|---|---|---|---|---|
| HDFC Bank | 8.55% – 13.00% p.a. (repo + 3.05% to +7.50%) | Floating; Fixed term-range 11.80%–13.30% | Not disclosed; profile-based pricing | None mentioned | LAP, Commercial Property Loan, OD; no foreclosure charges on individuals |
| Axis Bank | 9.25% – 11.00% (REPO + 3.75–4.50%) | Floating and fixed options | Not publicly tiered; credit profile & loan size affect spread | 0.05% concession for women (common practice) | Term Loan, OD facility, Lease Rental Discounting; tenures up to 20 yrs; processing ~1% |
| ICICI Bank | 10.85% – 12.50% (salaried PSL/NPSL) | Floating; overdraft and top-up options | Tiered by loan amount and segment (lower rates for PSL and larger loans) | Women co-applicant often gets lower rates | LAP up to ₹50 L (PSL) & ₹100 L (non-PSL); top-up and OD options; tenure up to 15 yrs |
| Bank of India | ~REPO+0.70% (~10.05%) with 0.50% women-student concessions | Floating (RBLR-linked) | Lower CIBIL (<760) benefits rate: RBLR+0.70% vs +1.25%+ | 0.50% concession for girl students co-applicant | LAP and Star Loan schemes; eligible for student concession |
| Canara / BOB / PNB | General: 10–16% p.a. | Floating | Not disclosed publicly | 0.05% women concession typical in sector | LAP/product lines with 20 yr tenures, robust PSB terms |
✅ Key Takeaways
- Lowest starting rate:
- HDFC Bank offers 8.55% (repo + 3.05%) floating.
- Axis Bank and BOI also begin near 9–10%.
- Rate structure:
- Most lenders use floating rates tied to REPO/RBLR.
- HDFC adds fixed-term options at ~11.8–13.3%.
- CIBIL & credit tiers:
- ICICI and BOI adjust based on credit, loan amount, priority sector status, and co-applicant profiles. Top-tier borrowers avail ~10.85–11.10%.
- Women/student benefits:
- BOI provides a 0.50% concession for girl-student scenarios.
- Axis, Canara, and BOB often include a 0.05% concession when women co-apply .
- ICICI offers pricing benefits if wife/mother is co-applicant .
- Product Variations:
- Axis offers LAP, OD facility, and Lease Rental Discounting with long tenures and transparent processing.
- HDFC includes LAP, commercial loans, and OD with flexible repayment terms.
- ICICI supports LAP up to ₹100 L, top-ups, overdraft draws, and tailor-made solutions .
🧭 Which LAP suits you best?
- Lowest interest: Go with HDFC Bank for competitive repo-linked rates.
- Women/student co-app applicant: BOI is best with 0.5% concession.
- Structured loans with multiple financing options: Choose Axis or ICICI.
- Large top-up or overdraft needs: ICICI combines LAP, overdraft, and top-up facilities.
Note: Interest rates may vary depending on borrower profile and market conditions.
EMI Calculator
Eligibility Criteria
To get a loan against property, you must meet the following conditions:
- Age: 21–65 years (varies by lender)
- Income: Regular income source (salaried or self-employed)
- Ownership: Property must be in your name or jointly owned
- Credit Score: Preferably 700 or above
Documents Required
Most lenders ask for the following documents when applying for a loan against property:
- Identity proof (Aadhar, PAN, Voter ID)
- Address proof
- Income documents (salary slips, ITRs)
- Property documents (title deed, tax receipts)
- Bank statements (past 6–12 months)
- Business proof (if self-employed)
Loan Amount You Can Avail
The amount you can borrow depends mainly on the market value of the property and your repayment capacity.
| Property Value | Max Loan You Can Get (LTV – Loan to Value) |
|---|---|
| ₹50 Lakhs | Up to ₹30–₹35 Lakhs (60–70% of value) |
| ₹1 Crore | Up to ₹60–₹70 Lakhs |
| ₹2 Crores and above | ₹1.2 Crore to ₹1.5 Crore |
LTV ratio depends on lender policies and applicant profile.
Repayment Options
You can repay the loan against property through:
- EMIs (Equated Monthly Installments)
- Part prepayment to reduce EMI burden
- Foreclosure if you wish to close the loan early (some lenders may charge fees)
Benefits of Loan Against Property
| Benefits | Description |
|---|---|
| Lower interest rate | Since it’s secured, rates are cheaper than unsecured loans |
| Large loan amount | You can get higher funds based on property value |
| Longer tenure | Tenures of up to 20 years make EMIs affordable |
| Continued property use | You still live in or use your property during the loan term |
| Versatile usage | Funds can be used for any purpose—education, medical, business, etc. |
Risks and Points to Consider
While a loan against property offers many benefits, you should be aware of the risks too:
- Property risk: If you fail to repay, the lender can take legal possession of your property.
- Long commitment: A long tenure means a long-term financial obligation.
- Value fluctuations: Property prices can go down, which may affect refinancing options.
- Processing time: More documentation and verification means it takes longer than personal loans.
When Should You Consider Loan Against Property?
You should consider a loan against property if:
- You need a large amount of money urgently
- You own a valuable property
- You are confident in your repayment ability
- You want to avoid high interest of unsecured loans
- You are looking for long-term funding
Tips to Get the Best Deal
- Compare offers from at least 3–5 lenders
- Improve your credit score before applying
- Negotiate processing and legal fees
- Choose fixed or floating rate depending on future interest outlook
- Understand the fine print of foreclosure or prepayment terms
FAQs
A. A Loan Against Property (LAP) is a secured loan where homeowners or business owners pledge residential or commercial property as collateral to borrow funds—typically at lower interest rates than personal loans.
A. Eligibility usually includes:
Valid ownership of the property
Steady income (salaried or self-employed)
A CIBIL score of ≈650+
The lender also checks factors like income, age, dependents, and repayment history.
A. Borrowing limit typically falls between 60–75% of the property’s market value. Some lenders offer up to 75%, but income and existing debts also play a role.
A. LAP rates in India range from ~9% to 13% p.a., depending on lender, credit score, loan amount, and tenure. Rates are usually floating and linked to benchmarks like repo or MCLR.
A. Yes. LAP offers:
Higher loan amounts
Longer tenures
Flexibility to mortgage different property
Top-up loans are typically smaller, shorter-tenured, and tied to an existing loan.
A. Loan tenures range between 10–20 years, enabling smaller EMIs but potentially higher total interest.
A. Standard charges include:
Processing fee (~1%)
Valuation, legal, and documentation fees
Prepayment penalties (varies)
A. Yes, adding a co-applicant—often spouse—can increase your loan limit and improve eligibility. For jointly owned property, all owners must be applicants.
A. Since LAP is secured, non-repayment may lead to foreclosure of the property under the SARFAESI framework. Borrowers must carefully evaluate repayment ability.
A. Documents generally include:
KYC (ID, address proof)
Income proof (salary slips, ITRs)
Property documents (title deed, tax receipts)
Property valuation & NOC from society/local body
💡 Bonus Tip – Do’s & Don’ts
- ✅ Do compare interest, tenures, and charges across lenders
- ❌ Don’t borrow more than you can repay—long tenure means more interest cost
- 🏦 Do choose a trusted lender and ensure clear documentation
Conclusion
A loan against property is a smart and cost-effective way to access large funds when you have a property to mortgage. It offers lower interest rates, bigger amounts, and longer repayment periods. However, since your property is at stake, you must borrow responsibly and ensure timely repayments.
This guide aimed to simplify the concept and process for you. Before applying, assess your financial situation, compare lenders, and always read the loan terms carefully.