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Loan Against Property

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Getting a car is still a dream for many, and a car loan will help you fulfil your dream. The prices of new cars might keep your dreams in the back seat. But not anymore; with the growing market of cars, with the growing market

Loan Against Property

Loan Against Property

A loan against property (LAP) is a secured loan designed to cater to your urgent financial need. In this, your property is pledged as security with the bank. You can apply for a loan against property to meet pe...

What Is A Loan Against Property?

A loan against property also considered as a mortgage loan is a secured loan where the borrower needs to pledge their property as collateral to secure the loan. The property could be residential, commercial, or industrial which serves as a security for the lender in case the borrower fails to repay the loan. The interest rates of a loan against property are generally lower as it is a secured loan. The amount of the loan is calculated on the basis of the market value of the property being mortgaged. The borrower is free to use the funds obtained through a loan against a property for various purposes whether it is business expansion, education, medical expenses, and other personal needs.

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Compare Banks by their Interest Rates


Bank Name Interest Rate Loan amount Tenure (Months)
SBI 9.45% onwards INR 10 Lakh to 7.5 Crore 5 to 15 years
HDFC Bank 9.50% to 10.50% Up to 65% of the property market value Up to 15 years
Kotak Mahindra Bank 9.15% onwards INR 10 Lakh to 5 Crore Up to 15 years
Bank of Baroda 10.20% onwards Up to 25 Crore Up to 15 years
YES Bank 12.00% onwards Up to 85% of the property value Up to 15 years

Eligibility Criteria For Loan Against Property

Most lenders evaluate borrowers’ eligibility by factors like income, age, credit history, and the property’s value. The eligibility criteria for a loan against property could differ from lender to lender. Here are some common eligibility criteria based on which lender decides to give a loan:
  • The borrower should be an Indian citizen and reside in India with property.
  • The borrower must be 25 years old to 85 years old in order to qualify for a loan against property.
  • The CIBIL score must be 750 or higher to get approval for the loan. It is the most vital eligibility criterion if you are thinking of applying for a loan against property, you must check your credit score.
  • The borrower should be a permanent employee of an organization with 2-3 years of experience.
  • The minimum income of the borrower should be 2-3 lakhs per annum. 

Required Documents For Loan Against Property

To get a loan against property, the borrower needs to submit various documents related to the property or verify their personal details. Some important documents required for a loan against property are:
  • Identity proof
  • Address proof
  • Income proof for salaried individuals (salary slips for the past 3 months, Income Tax Returns)
  • Income proof for self-employed (Income Tax returns of past 3 years, profit and loss statement, and balance sheet)
  • Documents related to property (title deeds of the property, sale deed, property tax receipts, encumbrance certificate)
  • Business proof, if you have your own business (business registration certificate, GST registration certificate)
  • Bank statements for the past six months.
  • Passport-size photographs

Factors Affecting Interest Rates of Loan Against Property

The Loan against property’s interest rate is influenced by many factors and understanding these factors can help the borrowers to anticipate the interest rates and make decisions accordingly. Factors affecting Loan against property interest rate are:
  • Credit Score: A higher credit score qualifies you for a loan with lower interest rates. Individuals with good credit scores seem less risky to the lenders and more likely to repay the loan on time. 
  • Loan Amount: A higher loan amount will automatically result in slightly higher interest rates. The allotted loan amount is a percentage of the market value of the property. 
  • PropertyType: The interest rate of the loan against property being mortgaged is impacted by the type and usage of the property. Residential properties may have different rates as compared to commercial or industrial properties. 
  • Loan-to-Value (LTV) Ratio: The LTV ratio refers to the percentage of the property value that the lender is willing to finance. A lower LTV ratio might result in lower interest rates, as it represents a lower risk for the lender.
  • Market Conditions: The market conditions at the time of getting the loan are the huge factor that can affect the interest rates of loan against property. Economic conditions, inflation rates, and overall market conditions can impact interest rates. 
  • Loan Tenure: The loan tenure can also influence the interest rate of the loan against property as longer tenures can have higher interest rates whereas shorter loan tenures may have lower interest rates.

How To Apply For A Loan Against Property?

A loan against property is a secured loan, which means that if you default on the loan, the lender can seize your property. Therefore, ensure that you are capable of repaying the loan amount before applying for it. Apply for a loan against property with following steps:
  • Research: Do some research on different lenders and their loan against property offerings to find the one that suits your requirements.
  • Check Eligibility: Check the eligibility criteria of the lender to ensure that you meet all the requirements.
  • Gather Documents: Collect all the required documents such as identity proof, address proof, income proof, and property documents.
  • Apply Online: You can easily apply for a loan against property online through the lender’s official website.
  • Submit Documents: Submit all the necessary documents along with the loan application form.
  • Property Evaluation: The lender will evaluate your property to determine its market value and the loan amount you are eligible for.
  • Loan Approval: Once your application is approved, the loan amount will be disbursed to your account.


A Loan Against Property (LAP), also known as a mortgage loan, is a type of secured loan provided by financial institutions such as banks or non-banking financial companies (NBFCs). It allows individuals or businesses to borrow money by pledging their immovable property, such as a residential or commercial property, as collateral. The property serves as security for the loan, providing the lender with a guarantee that they can recover their funds in case the borrower defaults on the repayment.

Getting a loan against property involves using a piece of real estate, such as a residential or commercial property, as collateral to secure a loan from a financial institution. This type of loan is commonly known as a mortgage loan or a LAP (Loan Against Property). Here are the steps typically involved in obtaining a loan against property: Eligibility Check,Required Documentation.

The advantage of a Loan Against Property (LAP) lies in its lower interest rates compared to unsecured loans like personal loans or credit cards. Since the loan is backed by collateral (property), lenders consider it less risky, resulting in more favorable terms for borrowers. Additionally, LAP offers higher loan amounts and longer repayment tenures, making it a suitable option for substantial financial needs. It allows individuals to leverage the value of their property without the need to sell it, providing a source of liquidity for various purposes like business expansion, education, medical emergencies, and more.

The criteria for obtaining a loan against your property typically include:

Property Ownership: You must be the legal owner of the property against which you’re seeking the loan.

Property Title: The property should have a clear and marketable title, without any legal disputes.

Property Valuation: The property’s value will be assessed by the lender to determine the loan amount you’re eligible for.

Age and Eligibility: Lenders may have age restrictions, and you must meet their eligibility criteria, which could include factors like income, credit score, and employment status.

Loan-to-Value Ratio (LTV): Lenders will typically offer a percentage of the property’s current market value as a loan. This is known as the Loan-to-Value ratio. The exact percentage can vary.

A Loan Against Property (LAP) set up as a charge on the security means that the property used as collateral is pledged to the lender. This serves as a security interest, ensuring that if the borrower defaults on the loan, the lender has a legal right to take possession of and sell the property to recover the outstanding debt. The charge is typically registered with the appropriate legal authorities, providing formal acknowledgment of the lender’s claim on the property.

A loan secured by property is appropriate for significant expenses or investments, such as purchasing a home, funding a real estate project, or making substantial renovations/improvements to existing property.

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