Loan Against Property

A Loan Against Property is a secured loan against a person's property. It is a loan provided by banks or non-banking financial institutions (NBFCs) in which the borrower puts their property as collateral for the loan amount. This loan is generally used for significant expenses like house renovations, business expansions, or investments. It is a popular type of mortgage loan in India.

A borrower may get a loan of up to 70% of the property's worth. Before an individual applies for a loan against property, they should be fully aware of the loan against property interest rates, eligibility and process.

Loan Against Property Interest Rate of Banks & NBFCs

The loan against property interest rates provided by different banks and NBFCs are mentioned below:

Bank and NBFCs

Interest Rates (p.a.)

Bank of Baroda

10.85% – 16.50%

ICICI Bank

10.85% – 12.50%

Bank of India

11.35% onwards

Bajaj Housing Finance

8.50% – 18.00%

Federal Bank

12.60% onwards

Central Bank of India

12.15% – 14.25%

HDFC Ltd.

9.35% – 12.25%

Indian Bank

10.00% – 12.60%

L&T Housing Finance

9.60% onwards

IDFC First Bank

8.75% – 16.25%

India Shelter Finance Corporation Ltd.

15.00% – 24.50%

PNB Housing Finance

8.99% – 13.00%

Kotak Mahindra Bank

9.15% onwards

Axis Bank

9.90% – 10.35%

Punjab National Bank

10.40% – 12.75%

Karur Vysya Bank

11.13% – 14.03%

State Bank of India

10.90% – 11.30%

UCO Bank

10.95% – 12.10%

LIC Housing Finance

9.70% – 12.85%

Union Bank of India

10.50% – 13.15%

Tata Capital Housing Finance

9.85% onwards

Loan Against Property Eligibility

To be eligible for a Loan Against Property, one must meet the following requirements:

  • The individual must be an Indian citizen and should have collateral property in India.
  • Minimum age limit: 25 years, Maximum age limit: 70 years.
  • Must have a consistent income source.
  • Credit Score of 700 or higher. 

Apart from these, the lender will also consider the property's market value before proceeding with the loan application.

Documents Required to Apply for Loan Against Property

The applicant has to provide the following documents while applying for a Loan Against Property (LAP):

  • Identification Proof (passport, driver's license, and other government-issued IDs)
  • Proof of Ownership and Property Records (deed of sale, no objection certificate, and property tax receipts)
  • Address Proof (recent utility bill, property deed, or rental agreement for commercial property)
  • Income Proof (salary slips for the past three months, bank statements, and income tax returns)

Loan Against Property Application Process

Any individual who meets the eligibility criteria can apply for the loan application process. One can apply for the Loan Against Property application online or by visiting the bank branch. 

The online application process for Loan Against Property (LAP) is mentioned below:

  • Fill out the LAP application form through the official website of the bank or NBFC.
  • Enter your personal details, current address, educational qualification and employment details.
  • Upload the loan against property documents required for verification. It includes your address proof, identity proof, income proof and property details.
  • After receiving the loan application, the lender will verify your details and credit score. Hence, the applicant must provide accurate and complete information to avoid rejection of their application.
  • Once the application is approved, pay the processing fee and sign the e-mandate. 
  • An acknowledgement letter will be mailed to the applicant before the loan disbursal. 
  • Soon the sanctioned amount will be disbursed to the applicant’s bank account.

Factors Affecting Loan Against Property Interest Rates

CIBIL Records:

Lenders will use the applicant’s credit score to determine the repayment behaviour of the applicant. A poor credit score indicates that a person is a high-risk borrower who may struggle to repay the loan. As a result, to balance the risk of default, lenders may charge a higher interest rate on a LAP or can even reject the application.

Tenure Period and Loan Amount:

The interest rates applied on your loan also depend on the borrowed amount and tenure. The larger the loan amount - the higher the monthly installments, which the borrower may find difficult to pay. In such instances, the lender will demand a higher interest rate to compensate for the loan's risk.

Property Value:

Loan Against Property interest rates will also be determined by the property's appraised value. The higher the property's appraised value, the better the chances of receiving a lower interest rate.

 

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