HDFC Loan Against Property
Interest Rate

HDFC loans against property interest rate range from 7.35% to 10.15% p.a. for up to 65% of property value. You can avail the best HDFC LAP interest rate offer by pledging fully constructed, freehold residential and commercial property. Both salaried & self-employed can qualify for an affordable LAP interest rate from HDFC Ltd for personal as well as business needs.

About HDFC Loan Against Property

HDFC, the premier home loan funding institution in India, offers non-housing loans like loans against property. The primary characteristic of a Loan Against Property is that it is equivalent to a personal loan but backed by collateral. Thus, you can also refer to it as a secured personal loan. The features of an HDFC Loan Against Property are as follows.

HDFC Loan Against Property - Features

The features of the loan are:

  • HDFC Loan Against Property is available for meeting personal and business needs
  • HDFC offers loans against the property by accepting residential and commercial property
  • Loans are available against entirely constructed, freehold residential and commercial properties
  • Individual needs can range from marriage to education and medical expenses to other personal emergencies.
  • Business needs can be meeting working capital requirements or for expansion of the business
  • Convenient extended tenures up to 15 years
  • Attractive interest rates
  • Simplified documentation formalities
  • Relaxed eligibility norms
  • Comfortable repayments through monthly instalments
  • Pan-India reach
  • Loans are available for salaried and self-employed persons

HDFC Loan Against Property - Eligibility

The eligibility parameters of the loan are:

  • Salaried and self-employed individuals having a regular source of income can apply
  • The applicant should be the owner of an unencumbered residential or commercial property
  • Joint applications are permissible
  • The applicant should be between 21 and 65 years of age
  • Resident Indians are eligible for this loan facility

HDFC Loan Against Property Interest Rate

HDFC refers to its Retail Prime Lending Rate (Non-housing) for determining the individual interest rates on Loan Against Property. The RPLR (Non-housing) of HDFC is 9.90% as on date.

The interest rate on the individual Loan Against Property depends on various factors:

  • The amount of the loan
  • Whether the property is self-occupied or rented
  • Whether the property is residential or commercial
  • The credit rating of the borrower

HDFC offers both fixed-rate and floating rate of interest on its Loan Against Property. HDFC terms its floating rate structure as Adjustable Rate Loan. The fixed-rate structure is known as Tru-Fixed Loan. In this structure, the rate of interest remains fixed for two years. Subsequently, the loan switches over to a floating rate of interest loan. The Adjustable-rate of interest applies to such loans after the switchover.

HDFC Loan Against Property - Interest Rate Structure

Adjustable-Rate Loan
Residential Property
Loan SlabInterest Rate (% per annum)
Self-occupied Residential Property - Loans up to 49.99 Lakhs9.40% to 10.40%
Self-occupied Residential Property - Loans of 50 Lakhs and above9.40% to 10.40%
Non-self-occupied Residential Property - Loans up to 49.99 Lakhs9.65% to 10.65%
Non-self-occupied Residential Property - Loans of 50 Lakhs and above9.65% to 10.65%
Commercial Property
Loan SlabInterest Rate (% per annum)
Commercial Property - Loans up to 49.99 Lakhs9.65% to 11.50%
Commercial Property - Loans of 50 Lakhs and above9.65% to 11.50%
TruFixed Loan - 2-year fixed rate
Self-Occupied Property
Loan SlabInterest Rate (% per annum)
Self-occupied Residential Property - Loans up to 49.99 Lakhs10% to 11%
Self-occupied Residential Property - Loans of 50 Lakhs and above9.80% to 10.80%
Non-self-occupied Residential Property - Loans up to 49.99 Lakhs10.25% to 11.25%
Non-self-occupied Residential Property - Loans of 50 Lakhs and above10 to 11%
Commercial Property
Loan SlabInterest Rate (% per annum)
Commercial Property - Loans up to 49.99 Lakhs10.25% to 12.05%
Commercial Property - Loans of 50 Lakhs and above10% to 11.90%

HDFC calculates interest on the reducing balance method. Banks calculate interest on the daily reducing balances, whereas HDFC does so on a monthly reducing basis.

Drawbacks of calculating interest on monthly reducing balances

  • This mode of calculation not as beneficial to the borrower as the daily reducing balances method.
  • HDFC considers the closing balance of the previous month for the calculation of the interest for the current month.
  • It implies that the borrower does not get the benefit of interest on the EMI that they pay for the current month.
  • Usually, HDFC collects the instalments between the 5th and the 10th of the month. Therefore, the customers lose the benefit of interest on the current month EMI for a period of around 20 to 25 days. Over the entire tenure, it adds up to a substantial sum.

Difference between the Monthly reducing and Daily reducing balance methods

In the daily reducing balance method, the borrower gets the benefit of interest on the current month's instalment. It is not so in the case of the monthly reducing balance methods. All banks calculate interest on the daily reducing balance method, whereas the NBFCs do so on the monthly reducing balances.

Difference between Adjustable Rate and TruFixed Loan Rate

  • The Adjustable Rate is a floating rate of interest that changes whenever HDFC varies its RPLR (Non-Housing).
  • The TruFixed Loan Rate is a unique rate structure where the rate of interest remains fixed for two years.
  • Subsequently, the rate of interest switches over to the Adjustable Rate of Interest structure.

Benefits of Adjustable Rate Structure

  • The interest rate changes with every variation of the HDFC RPLR. The RPLR is a market-linked rate. Hence, every reduction in the market rates benefits the borrower.
  • The Adjustable Rate Structure is beneficial in a falling interest rate scenario

Benefits of TruFixed Loan Rate Structure

  • The TruFixed Loan rate structure is advantageous in a fluctuating rate scenario
  • The borrower gets the benefit if the HDFC RPLR increases during the initial two years of the loan

However, the benefit is only for two years. The loan automatically switches over to the Adjustable Rate of Interest structure.

The benefit of a floating rate structure is that there are no pre-payment or foreclosure penalties for individual borrowers. This benefit is not available to the borrowers if they are in the fixed-rate period of a TruFixed Loan structure.

HDFC Loan Against Property - Charges

The bank levies the following charges on loan apart from the interest rate:

HDFC Loan Against Property - Prepayment Charges

Adjustable-Rate Loans and the Combination Rate Loans during the applicability of floating rates of interest

Individual Borrowers

No prepayment or foreclosure charges on payments made through all sources (own sources of balance transfer).

Non-Individual Borrowers - Sole proprietors, partnership firms, companies, HUF

  • Repayment within 6 months: Prepayment penalty @ 2% on the prepaid amounts
  • After 6 months and up to 36 months: The borrower has the option to pay 25% of the opening principal amount every financial year without incurring any pre-payment charges. Any payment exceeding 25% is subject to a penalty of 2% of the amounts prepaid over the threshold amount. This concession is only available if the borrower prepays the amount from its sources.
  • After 36 months: No prepayment penalty if the borrower repays from own sources
Fixed-Rate Loans and the Combination Rate Loans during the applicability of the fixed rate of interest

Individual Borrowers

  • No penalty if the borrower prepays from own sources
  • If prepaid through refinancing from other sources like balance transfer: 2% penalty on the amount prepaid.

Non-Individual Borrowers

  • Repayment within 6 months: Prepayment penalty @ 2% on the amounts prepaid
  • After 6 months and up to 36 months: If the borrower prepays from own sources, they can opt to pay up to 25% of the opening balance of the financial year without any penalty. Payments exceeding 25% will be subject to a penalty of 2% on the amounts exceeding the threshold value of 25%. If the pre-payment if through a balance transfer, the entire prepaid sum is subject to a penalty of 2%.
  • After 36 months: No pre-payment penalty if the payment is from own sources. Otherwise, there is a pre-payment penalty of 2%.

HDFC Loan Against Property - Conversion Charges

  • Switch from the TruFixed rate to the variable rate: 1.75% of the outstanding amount and the undisbursed amount, if any.
  • Switch to a lower rate of interest: Half of the spread difference on the outstanding amount plus the undisbursed amount with a minimum of 0.5% and a maximum of 1.50%.

HDFC Loan Against Property - Processing Fees and Other Charges

  • Processing fees: Up to 1.50% of the loan with a minimum of 4,500
  • External opinion fees: Actual basis
  • Insurance of property: The customer bears the premium amount directly to the insurance provider.
  • Delayed payment charges: 2% per month on the late payment amount
  • Incidental charges: As per actuals
  • Statutory charges: As per actuals
  • Other charges: Between 200 and 500

Kotak Mahindra Home Loan @6.50% p.a for all amounts

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HDFC Loan Against Property Interest Rate FAQs

Which is beneficial to the borrower, the Adjustable Rate or the TruFixed Rate?

The Adjustable Rate structure is on the lower side as compared to the TruFixed rate. Hence, it is more beneficial to the borrower. However, for people who do not like fluctuations in the interest rates, the TruFixed rate is the better option. The advantage of the Adjustable Rate of Interest is that it changes with every variation in the RPLR. The TruFixed rate remains fixed for two years from the disbursement date. Subsequently, the price switches over to a floating or adjustable rate.

What are the factors that affect the individual interest rates in HDFC Loan Against Property?

HDFC refers to its Retail Prime Lending Rate (Non-Housing) for determining the interest rate on loans against property. The individual rates of interest depend on the following factors.

  • The loan amount is a critical factor. HDFC has different rate structures for loans below 50 lakhs and loans for 50 and above.
  • Loans against self-occupied residential property have a different rate structure when compared to a non-self-occupied residential property.
  • Loans against commercial property have a different rate of interest as compared to a residential property.
  • The rate of interest on the individual loan depends on the credit rating of the borrower

How does HDFC calculate interest on the loans against the property?

HDFC calculates interest on the monthly reducing balances on loans against property. Thus, the interest for February will be on the loan amount outstanding as on January 31. It is irrespective of when you pay the instalment for February.

What is the penalty for delayed payment of loan instalment?

Delayed payments of loan instalments attract penalty @ 2% per month for the number of days of default.

Does HDFC offer a different rate of interest for self-employed and salaried individuals?

As far as the loans against property are concerned, the rate of interest is the same for salaried and self-employed individuals. However, in the case of home loans, the rate of interest for salaried individuals and self-employed professionals are the same. The percentage varies for self-employed non-professionals, who have to pay a higher rate.

Why is the rate of interest higher for a self-employed non-professional in the case of a home loan?

The income of the self-employed non-professional is of a varied nature and not of the regular kind. Hence, the company considers such borrowers as riskier when compared to salaried persons.

Why there is a variation in the interest rate for the Adjustable Rate and the TruFixed Loan Rate?

The Adjustable Rate is a floating rate of interest. The rate of interest varies in accordance with the RPLR. On the other hand, the TruFixed rate of interest remains the same for two years. Hence, the rate is on the higher side to compensate for any wild fluctuations in the floating rates.

Why there is a variation in the rate of interest for the loan against self-occupied residential property and non-self-occupied property?

HDFC treats properties occupied by the owner as self-occupied. It also considers vacant properties as self-occupied. However, in the case of rented houses, the risk factor is higher when compared to the self-occupied homes. The company can face trouble in evicting the tenants when compared to the owners of the house. Therefore, the rate of interest for a self-occupied property is less than that of non-self-occupied property.

Why is the rate of interest on the Loan Against Property higher than the home loan when the security is the same?

The rate of interest on a loan depends on the purpose for which HDFC grants the loan. The home loans are for constructing or purchasing houses. The Loan Against Property is to meet personal or business requirements. It is not possible to ascertain the end-use of funds. Hence, the rate of interest on a home loan is less than that of a loan against security?

Under such circumstances, why are personal loans expensive when compared to a Loan Against Property?

The personal loans are unsecured. On the other hand, the Loan Against Property has the backing of collateral in the form of residential property. Therefore, it is a secured loan. Thus, the rate of interest on the Loan Against Property is less than that of a personal loan.