Know About Loan Against Property: Interest Rate & Charges

loan against property

A loan against property is a secured loan whereby individuals pledge their property as collateral. One can utilize the availed loan to fund big-ticket expenses like higher education, weddings, medical emergencies or home renovations and hence, it is perceived as a viable option by many. Besides, this kind of loan option comes with a low-interest rate. 

Nevertheless, before opting for a loan against property, customers can keep in mind the factors that influence the applicable interest rates to avail maximum benefits.

What are the factors affecting LAP interest rates? 

According to the article published by the Financial Express, the loan against property interest rate offered by some financial institutions varies between 8.00% p.a. to 10% p.a. for loan amounts of up to Rs.15 lakh. 

It is imperative to understand the factors that influence this rate. Underlined below are some factors that influence a loan against property interest rate: 

  1. Profile of the applicant 

An applicant’s profile is characterised by his/her employment status, age, monthly income, city of residence, affecting the loan against property interest rate charged by a lender. 

  1. Credit score 

One’s credit score plays a crucial role in determining the interest rate while acquiring a loan against property. Financial experts recommend maintaining a CIBIL score of 750 or above to avail low-interest rates. 

  1. Type of property and its location 

The interest rate may differ according to the type of property pledged as collateral. In this case, the residential and commercial property may bear different values. 

Besides, the property’s age, location and condition also influence this rate. Properties in a well-connected locality with several amenities will fetch lower interest rates than the one in an isolated place.

  1. Loan tenor 

A LAP is a financial commitment whereby a borrower may need to pay his/her EMIs for 10 to 15 years. Individuals opting for a shorter tenor will have to pay higher EMIs and vice versa. However, customers should note that a longer tenor significantly increases one’s total interest outgo. In this regard, one can take the help of a loan against property EMI calculator to understand the instalments payable per financial capability. 

How to apply for a loan against property? 

Individuals can apply through the online mode for a loan against property. This method is hassle-free and requires minimal documentation. The steps are given below for easier understanding: 

Step 1: Visit the official website of your preferred lender. 

Step 2: Navigate to the section ‘Apply now’ and start filling the form. 

Step 3: Provide essential details, such as name, employment status, age and property details. 

Step 4: Once the lender receives your application, they will verify the details. However, this may take some days to get approved. Applicants must ensure that they meet loan against property eligibility criteria.

Step 5: The lending institution will evaluate all the documents provided. This includes property documents that they will be assessing on legal grounds. Once this step is complete, the loan amount will be disbursed. 

What are the eligibility criteria? 

Specific eligibility parameters have been set for self-employed and salaried individuals. These must be met successfully avail the loan. The common eligibility parameters are:


  • Must be a resident of India 
  • Must be between 28 to 58 years of age 
  • The applicant must be working in an MNC or at public or private companies. 
  • They must have three years of experience 


  • Should be a resident of India 
  • Their age must vary from 25 to 70 years
  • The applicant must have a stable source of income and have business continuity of 5 years 

Potential borrowers availing a loan against property must make repayments on time. This will help boost credit scores and allow individuals to avail certain offers extended by reputed financial institutions. 

For instance, pre-approved offers are extended by financial institutions for existing customers. This facility allows such individuals to skip the hassle of documentation and verification and avail a loan faster. It is possible due to the already established relationship between the lender and a customer. These offers apply to various financial products, including home loans and loans against property. Borrowers can check their pre-approved offers online by entering their contact details. 

Therefore, before applying for the same, one must keep the factors that affect loan against property interest rate in mind. Considering this will help streamline the borrowing process. 

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