Loan Against Property Interest Rate

Compare Banks to get lowest Mortgage Loan Interest Rate.

Calculating LAP interest rates can be challenging, especially if you are not familiar with the loan's intricacies. However, several online LAP interest rate calculators can help you determine the loan's interest rate and the total cost. These calculators take into account various factors such as loan amount, tenure, interest rate, and processing fees.

Below are the LAP EMI details for 5 yrs, 10 yrs and 15 yrs for different amounts at 8.90% p.a.

You can also use LAP EMI Calculator to find out how much you will save on interest and how it affects your Loan EMI.

If we classify the bank loan interest rates into three categories like 'Low, Medium, and High,' the interest rate for the Loan Against Property will fall in the Medium category. There are specific reasons why it classifies under this category. We shall discuss the logic, but in the meanwhile, this loan against property lowest interest rate comparison should help you understand the classification.

You can use the Loan Against Property EMI Calculator tool to know how much you would have to set aside each month to repay the loan and plan your finances in advance. The EMI calculator requires a few basic details to calculate the EMI amount, such as the loan amount, the applicable interest rate, and the tenure.

Illustration:

Let’s assume that you availed a loan against property of Rs. 25 Lakhs for a tenure of 10 years with an interest rate of 10%. Now, taking into consideration the principal amount, interest rate, and tenure, you will have to pay an EMI of Rs. 33,038 to repay the loan during the tenure.

Here’s is the complete amortization schedule for the above illustration:

The loan against property eligibility criteria and document requirements may vary from one lender to another. Check your eligibility online and apply for the Best loan against property offers for your personal or business needs.

Listed below are some common eligibility parameters that a borrower needs to fulfil to get a loan against property:

• Any permanent salaried professional in an organization can apply for a LAP.
• Professionals like chartered accountants, doctors, architects, cost accountants, company secretaries, dentists, engineers, and management consultants can also apply.
• Income tax-paying self-employed individuals are also eligible for LAP.
• Lenders will consider your net monthly income, savings and existing debt obligations before approving your loan.
• The applicant must also have a decent CIBIL score.
• The eligibility for a mortgage loan is also calculated based on the value of your mortgaged property.

Following are the general documents required for a loan against property:

• Proof of identity: Passport, Aadhaar Card, PAN Card, etc.
• Proof of address: Passport, Aadhaar Card, Driving License, Utility Bills, Voter ID Card, etc.
• Property documents: Sales Deed, Property Tax Receipt, Registration Certificate, Building Plan approved by the Municipal Corporation, etc
• Income documents: Form 16, Income Tax Returns, Bank Statements, Salary Slips, etc.

Finding the lowest mortgage loan interest rate is the 2nd step. The 1st step will always be to find out what are the benefits of loan against property.

Collateral-Backed Loan from Banks and Institutions

Loan Against Property is a type of collateral-backed personal loan offered by banks and institutions against the security of residential or commercial property.

Used for personal or business expenses

It can be used to meet personal expenses like medical needs, marriage expenses, education, home repairs, etc. or for acquiring a long-term capital asset for business expansion.

Available for self-employed and businesses

Business entities and self-employed individuals can also avail this facility to meet their urgent day-to-day expenses and working capital requirements.

Higher loan amount than unsecured loans

Since Loan Against Property is a secured loan, the loan amount offered by the bank is higher than a personal loan, which is an unsecured loan.

Different from personal loans

The purpose of both personal loans and Loan Against Property is the same, but the characterization of both is different.

Clear eligibility criteria and calculators available

The eligibility criteria for Loan Against Property are clearly defined, and banks offer eligibility calculators on their websites to determine eligibility.

Middle-tier interest rates

The lowest lap rate of interest charged by lending institutions belongs to the middle tier and are not as high as personal loan and credit card interest rates.

Relaxations in CIBIL score

As Loan Against Property is a safer proposition for banks, they offer relaxations on CIBIL score requirements. Borrowers with a CIBIL rating between 650 and 750 can also avail of this loan.

You can also Check Loan Against Property without Income Proof

You can avail of low mortgage loan interest rate by following these tips:

• Go for a shorter repayment tenure
• Negotiate with the lender
• Pay more down payment
• Make regular prepayment
• Opt for a home loan balance transfer if rates are high
• Revise your EMI payout every year
• Look for better deals offers

You can also check PNB Housing Loan against Property Interest Rates

• Property value: The loan amount to be sanctioned under the loan against property depends on your property’s evaluation done by the lending institution. The evaluation process usually consists of a property appraisal to assess the current market value of the pledged property. This is generally followed by the verification of the documentation by the lender to ensure that the property is fully constructed and freehold with a clear title. Usually, the amount sanctioned under a mortgage loan ranges from 50% - 75% of the appraised market value, known as the Loan-to-value (LTV) ratio. 
• Rate of interest: Usually most lenders offer loans against property at lower interest rates than personal loans and business loans because it is secured against property as collateral. Higher loan security and lower margin amount mean a lower property loan interest rate, as it reduces the probability of loss for the lender in case of default. You can reduce the secured loan interest rates cost further if the lender offers an overdraft facility and credit limit on your LAP. That is because in such cases, you are required to pay interest only on the amount withdrawn, and not on the whole amount.  
• Processing fees & other charges: Every loan sanction under loan against property involves a processing fee charged by the lender as per their policies. It may range anywhere between 0.5% to 3% of the sanctioned loan amount. The processing fee can either be charged upfront or deducted from the principal loan amount after the loan sanction. In addition, you must also consider looking at the documentation, part prepayment, foreclosure, interest rate switch and other charges involved in taking an LAP.
• Processing time: You must take into account the processing time of a mortgage loan into consideration as these loans have relatively higher processing time, unlike personal loans, which can be processed within a few days or even minutes. This is because the pledged property has to be scrutinised for any encumbrances and evaluated. 
• Repayment: The loan repayment is another factor to consider. Typically, lenders offer a loan against property for flexible tenure of anywhere between 5 to 20 years, depending on the borrower’s age, income, loan amount requirement and other factors. Even though a longer tenure results in smaller EMI payments, it could also result in higher interest payments. A shorter tenure is more suitable for saving on interest payments. 
• Tax benefits: A salaried individual can benefit from loan interest deductions under Section 24(B) of the Income Tax Act if the loan amount is used for the construction of a new residential house. Also, if you are a business person, you may claim benefits under Section 37 of the Tax Act.  
• Lender’s eligibility criteria: Every lender has their own criteria to assess your eligibility for a mortgage loan. For instance, one lender may want you to be at least 21 years of age to sanction you a minimum of Rs. 30 Lakhs loan amount, whereas another lender may require you to be at least 25 years of age, but may sanction Rs. 50 Lakhs. Therefore, it is imperative to understand the lender’s eligibility criteria for an LAP before applying for the loan.
• Credit score: Even though an LAP is offered against the pledged property, it does not mean lenders don’t look at your CIBIL score. A healthy credit score can help you get the loan sanctioned at a low collateral loan interest rate with better terms and conditions. 

Here are some common steps to be followed to avail a loan against property:

• According to your needs and eligibility, choose a desired and reputed lender to avail of the best loan against property deal.
• Visit the official website of the lender and fill in the online application form by entering some basic personal details, financial and other required information.
• Enter and submit the required loan details, such as loan amount, tenure, etc.
• Based on the information entered by you, the lender will calculate your loan against property eligibility.
• The lender will then collect the documents required for your eligibility assessment and verification process. You will have to submit the property documents as well for the valuation process.
• If the lender is satisfied with your profile and if you agree with the offered LAP loan interest rate and terms, the loan sanction letter will be sent to your registered postal address.
• You will have to submit the original property documents before to the loan disbursement.

You can follow the tips mentioned below to reduce your mortgage loan interest rates:

• Look for the applicable mortgage loan lowest interest rates offered by different lenders on different loan amounts. Usually, the interest rate is lower for a higher loan amount.
• Choose a suitable tenure as it has a direct impact on the interest rate offered by the lender.
• Look out for financial institutions that offer the best interest rate offers on loans.
• Do not apply for multiple loans simultaneously with various lenders as each application rejection will lower your CIBIL score, which leads to a higher home mortgage loan interest rate.
• Opt for a loan amount that fits your affordability.