What is Loan against Property?

Loan against property refers to the amount you can borrow against your property. Banks provide loan against both commercial and residential property. Also, you can take a loan against your rented residential property, self-occupied property or vacant property. It could be piece of land or a house. The amount received as loan against property can be used for acquiring new property or you can use the same amount to take-over of your existing loan by refinancing. It is a kind of secured loan where the border use his/her property as collateral.

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Loan against Property(LAP) is one of the variants of the Personal loan, Laps are secured loans offered by banks and financial institutions using one or more properties owned by you as collateral. One can avail these mortgage loans against commercial property and residential property collaterals. In a LAP the property is mortgaged and a fixed percentage of the prevailing market value of the property (normally between 60-70% of the value of the property) is given to the borrower as a loan. Though such a property is mortgaged to the lender, you are still allowed to continue using it for residential or commercial purposes.


These loans are a better option as compared to personal loans due to their comparatively lower rate of interest. Additionally, unlike gold loans, where the gold ornaments are deposited with the bank and you do not get them back until the loan is paid in full, you can continue using the collateral property in a LAP while you are repaying the loan.


Loans against property are a highly preferred form of loans in India, and are much more easily available with the surge in banks and NBFCs providing such loans. Along with being cost-effective, these loans are reasonably convenient to avail and repay due to the relatively low Loans against Property interest rate.

LAP Loan Interest RatesUpdated on 09 Jan 2019

Bank/Provider NameInterest RatesLoan Processing Fees
HDFC BANK10.5% onwards0.5% of loan amt. or Max. Rs. 10,000
ICICI BANK9.7% onwards0.5% of loan amt.
AXIS BANK9.75% onwards0.25% + ST
INDIABULLS10% onwards1%
DHFL10.25% onwards1%
LIC HFLUpto 1 Cr - 10.50%; 1cr to 3 cr 10.80%; 3 cr to 5 Cr 11%Govt Emp- Rs 1000 + ST, Others Rs2500+ST
PNB HFL10.25% onwardsRs 10000 for salaried / 0.50% for self employed
TATA CAPITAL11.25% onwards1%
CITIBANKSalaried :10.00% and Self Employed :Upto 1 Cr 10%, 1 Cr to 3 Cr 9.75%, Above 3 Cr 9.5%0.25%

How to repay Loan against Property

The repayment procedure for loan against property is almost same with home loan repayment procedure. Many leading lending institutions accept both part repayment and full repayment. Also, many financial institutions does not charges any extra fees on prepayment. You repay your loan against property in Equated Monthly Installments (EMIs) which comprise your contribution towards the principal amount as well as interest payment. Your EMIs will start immediately after you accept the full disbursement.


Loan against Property Eligibility

For salaried individuals, and for professionals and businessmen who are self-employed, the loan against property eligibility requirement in banks or for other institutions is pretty similar.

The Usual eligibility criteria to avail Loan against property are:

  • You must be an Indian national
  • You should be at least 21 years at the time of submission of the loan application
  • You must have been employed by the current organization or should be involved in the current business for a specific number of years
  • You must  earn the minimum required salary as well as have the minimum monthly repaying capacity
  • You should have a good credit history with proven track record of timely loan EMI and credit card bill repayment. This factor may help you secure a lower interest rate and reduce loan application processing time too.

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Loan against Property Interest Rates

Loan against property is a secured loan i.e. the bank keeps the property documents as collateral during the term of the loan. Due to the reduced risk perceived by the bank in case of LAP, the interest rates on offer in LAP are quite low and usually close to the base rate.

Different banks offer Loans against property with options of fixed interest rate and floating interest rate to applicants to choose from.

Fixed Interest Rate: The interest rate of a fixed rate loan against property remains the same throughout the loan’s tenure. However different financial institutions levy different interest rates for  Fixed-rate Loans against property.

Floating Rate: Floating or adjustable interest rate is not fixed. This type of interest rate varies according to prevailing market conditions

Difference between Loan against Property and Personal Loan:

  • Personal loan is an unsecured loan whereas Loan against property is a secured loan.
  • For personal loan, an individual can take a loan for personal use without any security or guarantor; however, for loan against property, an individual has to mortgage the residential or commercial property.
  • Rate of interest for LAP or Mortgage loan is comparatively much lower than Personal loans.
  • Equated Monthly Instalments (EMIs) for LAP are cheaper; whereas for Personal Loans, an individual has to pay higher EMIs.
  • The sanctioned loan amount for LAP depends upon the value of the property and in case of personal loan; an individual’s income defines the amount of sanctioned loan amount.
  • Loan tenure of mortgage loans is higher as compared to loan tenure of Personal Loans. For LAP, a person usually gets a loan for a maximum of 180 months (15 years) and for Personal Loan, an individual usually gets a loan for 60 months (5 years).
  • Loan against property is an ideal way to employ an idle property to raise required capital rather than resorting to high interest personal loans

Loan against Property Eligibility Calculator

By using a loan against property eligibility calculator, a borrower can calculate your eligibility for Loan against Property
. The calculator will help you know you eligibility in various cities in India. While determining loan against property, banks mostly look at the following factors – property value, repayment capacity, total assets and liabilities, age of the applicant and his/her qualifications, number of dependants, spouse’s income, and legal and technical aspect of your property. Based on your eligibility, bank will decide how much amount you would receive as loan against property.

Example: The State Bank of India provides a minimum of Rs.25, 000 and a maximum of Rs.1 crore as loan against property. The bank pays these amounts based on the following conditions:

  • 24 times of the net monthly income of salaried professionals,
  • And 2 times of the net annual income of self-employed and others.

A borrower can get up to 60% of the total market value of his/her property as loan against property.

*** Loan against property amounts are subject to change from time to time.

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