Loan Against Property (LAP) Interest Rates

Loan Against Property Interest Rates

Note: Loan Against Property Interest Rates as of 24 June 2025

Loan Against Property EMI Calculator

Also Read: Top Banks and NBFCs for Loan against Property

Factors Affecting Loan Against Property Interest Rates

Credit Score

A high credit score reflects responsible credit behaviour and financial discipline; therefore, many lenders offer mortgage loans to applicants with higher credit scores at lower interest rates. Individuals lacking or having low credit scores can build/improve it by availing secured credit cards.

Note: As lenders have an option to sell the underlying collateral if LAP is defaulted on, they tend to be more lenient with credit scores and other metrics when reviewing LAP applications. As a result, those who have been rejected a personal loan or are being charged higher interest rate due to their low credit score can consider availing LAP.

Loan Amount

Many banks and HFCs fix LAP interest rates on the basis of loan slabs. Loan against property amounting to Rs 30 lakh usually have a lower interest rate as compared to that of higher amounts.

Type of Property

Some lenders offer lower interest rate for self-occupied residential properties as compared to the rates charged for commercial properties or properties that are not self-occupied.

Women Applicants

Many lenders offer interest rate concession on loan against property typically of 0.05% to women borrowers. Hence, roping in a female family member as a co-applicant can help in availing a lower interest rate.

LTV Ratio

Loan to Value Ratio (LTV) refers to the proportion of the property value that you can avail as loan amount. The remaining value of the property has to be contributed by the homebuyer from his own sources. The maximum loan amount that lenders usually offer on a loan against property is up to 70% of the property’s value. Borrowing less helps reduce the loan-to-value ratio, increase loan eligibility and lower the interest rates. Note that LTV ratios also differ by the type of property.

Income and Employment

Lenders also factor in your income, type of employment and the profile of your employer while setting your loan against property interest rates. Lenders usually offer lower interest rates to salaried applicants due to their higher job/income certainty. Applicants who are self-employed with irregular income flows or unstable job profile or who have just started their professional journey are charged higher interest rates.

Also Read: Home Loan vs Loan Against Property – Which is Better?

Tips to Avail Mortgage Loan at Low Interest Rates

These are some of the tips that can help you get loan against property at lower interest rates:

• Build and maintain credit score of 700 or above
• Enquire first with those lenders with whom you have deposit and/or loan accounts
• Keep a track of interest rate concessions during festive seasons
• Visit online financial marketplaces to compare loan against property offers from different lenders

Also Read: Personal Loan vs Loan Against Property

Advantages of Availing Loan Against Property

The benefits of availing loan against property are given below:

• Higher sanction amount: Banks and HFCs usually offer up to 75% of the property value.
• Lower interest rates: Interest rate offered on loan against property is lower than the interest rates offered on unsecured loans like personal loan.
• Longer repayment period: Loan against property has longer repayment tenure of up to 20 years, thereby, lowering the EMIs.
• Optimum use of the property: While the property serves as collateral for the loan, it also continues to serve its original purpose.
• Higher scope of availing loan eligibility for applicants having lower credit score: Loan against property is secured in nature, i.e. it is backed by the underlying property. So, in case of loan default by the LAP borrower, the lender has the right to dispose off the underlying property to recover the money. This reduces the credit risk for the lenders and thereby, increases the chances of securing finance despite having low credit score.

FAQs on Loan Against Property Interest Rate

Which bank is the best for availing loan against property?

Usually, a lender offering loan against property at the lowest interest rates is the best. This is because lower rates will not only reduce borrowers’ EMI burden but also help them save on their total interest cost. However, besides interest rates, other loan features such as tenure, loan amount, LTV ratio, processing fees, disbursal time, etc. should also be looked into while shopping for mortgage loan offers. To search for the best bank for loan against property, consumers can visit online financial marketplaces to compare offers from various banks and HFCs.

How is my eligibility for loan against property calculated?

When calculating an applicant’s eligibility for loan against property, lenders may look into their age, occupation, income, business/job stability, existing loan repayment obligations, location and characteristics of the property, etc.

How can I know the total interest cost payable on the loan against property?

Mortgage loan applicants can use loan against property EMI calculators for calculating the total interest cost payable on their mortgage loans. They simply need to enter their principal amount, tenure and interest rates into these calculators for calculating the EMI and the total interest cost of the loan.

What are the end uses of loan against property?

Other than speculative purposes, loan against property can be availed for meeting both personal and business requirements like for covering expenses related to wedding, business expansion, debt consolidation, etc.

How much loan can be taken against property?

Lenders usually finance up to 75% of the property’s market value. Besides the property value, lenders also factor in repayment capacity of the applicant when deciding the eligible loan amount.