SBI Loan Against Property Interest Rate

SBI Loan against property interest rate range from 8.20% p.a to 9.45% p.a, basis your net monthly income and loan to property value. To get the best SBI LAP interest rate, you should have a good credit score and a required loan against property documents. Use online LAP calculator to check eligible interest rate quotes for SBI loans against property.

SBI Loan Against Property

SBI, India's premier bank, offers the maximum range of products to its customers. It has a variety of loan products to complement the deposit schemes on offer. As on date, the most popular loan product in SBI has to be the home loan. The Loan Against Property is also one of the fast-moving products in the bank. The advantages of availing a Loan Against Property are many.

The Loan Against Property is a suitable loan product if you need raising funds in an emergency. The loan is available for meeting all kinds of business and personal requirements. The features of SBI Loan Against Property are as follows.

  • Financial assistance available for meeting individual needs like medical expenses, education of children, marriage expenses, travelling, home repairs, and so on
  • Loans are also available for satisfying business requirements like working capital financing, procuring long-term assets, expansion of business, and so on
  • Similar to a personal loan in many respects
  • A secured personal loan where the borrower need not specify the end-use of funds
  • Quick processing and sanction
  • Comfortable eligibility norms
  • Simplified application procedure
  • Minimal documentation
  • Attractive rates of interest
  • Easy repayment schedules extending up to 15 years

SBI offers three types of loans against property:

SBI Loans Against Property

The objective of the loan

  • Meet individual and business requirements of its customers

Features of the loan

  • Complete transparency in the processing of the loan
  • Personal loan to owners of residential or commercial properties
  • Pan-India access
  • Charging of interest on daily reducing balances
  • Lowest processing charges structure
  • Inclusion of rental income for calculating loan eligibility in deserving cases
  • No penalty for pre-payment or foreclosure of the loan

The scheme in brief

  • Personal loan against mortgage of residential or commercial property
  • Can be used for personal or business use but not for speculative purpose
  • The minimum amount you can borrow under this product is 10 Lakhs
  • Depending on the location of the asset, the maximum amount can go up to 7.50 Crores
  • Processing fee of 1% of the loan amount (Maximum - 50,000)

Security for the loan

  • Equitable mortgage of the property
  • In the case of commercial property given on rent, assignment of rental income is an additional condition.

Loan to Value (LTV) ratio

  • Loans up to 1 Crore - 65%
  • Loans more than 1 Crore - 60%

Repayment tenure

  • Minimum - 5 years
  • Maximum - 15 years

EMI/NMI ratio

  • Net annual income between 3 Lakhs and up to 5 Lakhs - 50%
  • Net yearly income between 5 Lakhs and 10 Lakhs - 55%
  • Net annual income more than 10 Lakhs - 60%

The loan should be adjusted before the borrower turns 70 years of age

SBI Loans Against Mortgage of Immovable Property

The objective of the loan

  • Meet business and personal needs

Features of the loan

  • The minimum loan is 10 Lakhs
  • The maximum loan depends on the location of the asset with the ceiling of 5 Crores

a) NCR, Mumbai, Chennai, Bengaluru, Pune, Hyderabad, and Ahmedabad - 5 Crores

b) At other BPR centres - 2 Crores

c) At non-BPR centres - 1 Crore

d) Rural areas and semi-urban locations having population up to 1 Lakh - Nil

LTV ratio

  • Up to 1 Crore - 65%
  • More than 1 Crore - 60%

Income criteria

  • Minimum net monthly income should be 25,000
  • Minimum annual income for self-employed - 3 Lakhs
  • The income of co-applicant can be considered for determining loan eligibility
  • Rental income can be considered if commercial property is offered as a mortgage
  • The maximum age of the borrower should not be more than 70 years at the maturity of the loan

Non-resident Indians can also apply for this loan even if the property is in the name of first-hand relatives.

SBI Rent Plus

The objective of the loan

  • Loan against rent-receivables to meet liquidity mismatch

Features

  • Minimum loan - 50,000
  • Maximum amount in metro cities - 7.50 Crores and 5 Crores in non-metros
  • Loan amount calculation - Lowest of the following

a) 75% of the realisable value of the property

b) Maximum amount as per the scheme

c) 75% of the future rental receivables or receivables for the residual lease period

  • The margin on loan - 25%
  • acility type - Term loan
  • Repayment tenure - Maximum of ten years
  • Processing fee - 2.02% of the loan amount with a maximum of 1,01,865 to be paid as upfront fees.
  • No pre-payment penalty

SBI Loan Against Property Interest Rate

SBI refers to its one-year MCLR as the base for determining the individual interest rate on LAP. The one-year MCLR with effect from February 10, 2020, is 7.85%.

The rate of interest structure on Loan Against Property is as follows:

More than 50% of the NMI is from the salary of the borrower
Loan Amount RangeInterest RateEffective Rate
Up to 1 CroreOne-year MCLR + 1.45%9.30%
More than 1 Crore and up to 2 CroresOne-year MCLR + 2.10%9.95%
More than 2 CroresOne-year MCLR + 2.50%10.35%
 
More than 50% of the Net Monthly Income is from business or profession or rental income
Loan Amount RangeInterest RateEffective Rate
Up to 1 CroreOne-year MCLR + 2.10%9.95%
More than 1 Crore and up to 2 CroresOne-year MCLR + 2.60%10.45%
More than 2 CroresOne-year MCLR + 3.00%10.85%

As the rate of interest depends on the one-year MCLR, the reset will be at a frequency of one year. The date of reset will be at the end of one year from the date of disbursement.

Interest Rate Concept

SBI refers to the MCLR concept for determining the interest rate structure for a Loan Against Property. The housing loans are linked to the RLLR (Repo-Linked Lending Rate) concept. Both these rates are floating rates. SBI does not offer any fixed-rate product on its home loans or loans against property.

The differences between the RLLR and MCLR concept are as follows:

  • The RLLR links itself to the repo rate that is announced by RBI from time to time
  • The MCLR is the Marginal Cost of Funds based Lending Rate
  • SBI announces its MCLR every month. However, the rates in the individual accounts do not change immediately.
  • The Loan Against Property depends on the one-year MCLR. Therefore, the reset frequency is annual.
  • The rates of interest on the individual loans change on the completion of the year after the disbursement. Subsequently, they are reset at annual intervals depending on the MCLR prevailing on that day.
  • On the other hand, the RLLR-linked rates change on the first day of the month following the announcement of the RBI repo rate.
  • The RLLR is a better market-linked rate when compared to the MCLR

SBI Loan Against Property - Repayment Method

The ideal mode of repayment of the SBI Loan Against Property is the EMI. The EMI starts from the month following the disbursement of the loan:

  • SBI account holders can opt for the SI mode for deduction of the EMI
  • Borrowers maintaining their accounts elsewhere can opt for ECS deduction on the due dates
  • Borrowers can also pay their EMIs using the Yono Mobile app of SBI
  • They can also remit the EMI using channels like NEFT or RTGS using internet banking facility

SBI Loan Against Property - How to Apply

  • SBI offers facilities to apply for loans against property online. Access the official webpage of SBI Loan Against Property and click on the Apply Now option.
  • Select the purpose of the loan from the dropdown box
  • Indicate your relationship with SBI and provide your account number
  • Enter your mobile number and apply
  • You get an OTP on your phone. Enter the OTP and access the Loan Offer Page to complete the application.
  • SBI marketing executives will contact you to complete the application process

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SBI Loan Against Property Interest Rate FAQs

Why is the rate of interest on a personal loan more than the Loan Against Property?

Personal loans are clean loans without any security. Hence, the risk factor is high. Loans against property are secured loans. SBI has the backing of collateral in the form of equitable mortgage of the house. The Loan to Value Ratio is also in the range of 60% to 65%. Thus, the bank has adequate security to rely on in the case of a default. Therefore, risk perception is less. It reflects the rate of interest accordingly.

By the same logic, why are home loans cheaper than loans against the property?

Home loans are priority sector finances. SBI offers home loans for the creation of an asset, and hence, there is a productive use of the loan amount. Loans against property are against the security of an asset. There is no asset creation because of the Loan Against Property. The purpose of the Loan Against Property is for meeting personal and business emergencies. Therefore, the rate of interest on home loans is less when compared to the Loan Against Property.

What is the objective of the Loan Against Property?

SBI offers Loan Against Property to enable the borrower to meet personal or business emergencies.

Personal expenses can include medical expenses, marriage, education, and any other purposeful activity. The borrower undertakes not to engage in speculative activity with the use of a Loan Against Property.

Business expenses include expansion of business, meet day-to-day requirements of working capital, purchase long-term assets, and so on.

Why is the rate of interest different from a salaried person to a self-employed individual?

The salaried person has a fixed recurring income. The source of income is a stable one. On the other hand, a self-employed person could have a higher income as compared to a salaried person. However, profit is not a regular one. There can be wide fluctuations in the monthly income. Therefore, SBI considers a self-employed person as a riskier proposition when compared to a salaried individual. It explains the difference in the interest rate structure.

What factors decide the interest rate on Loan Against Property?

The following factors play a critical role in deciding the applicable interest rate on Loan Against Property.

  • The nature of employment or occupation of the borrower
  • The type of income of the borrower
  • The amount of loan
  • The type of property offered as mortgage
  • The credit rating of the borrower

How does the income type affect the rate of interest?

SBI considers all types of income when deciding the eligibility for a Loan Against Property.

  • The different types of income include salaried income, business income, rental income, and so on.
  • If more than 50% of the total income of the borrower is salaried income, the rate of interest is different from that of a self-employed person.
  • If rental or business income comprises more than 50% of the total income, the rate of interest is higher in comparison to salaried employees.

The distinction is because of the stability of the income source. The more stable the source of income, the less is the risk.

Will a change in the interest rate affect my EMI?

It depends on the loan tenure you agree with the bank. The bank cannot go beyond 15 years for the repayment of a Loan Against Property. If you decide for 15-year repayment tenure, any upward revision in the interest rate will cause the EMI to increase. However, if your loan tenure is less than 15 years, the bank can keep the EMI constant and increase the mandate accordingly.

What is the EMI/NMI concept?

SBI has a specific EMI/NMI concept where the EMI on Loan Against Property cannot go beyond a specific proportion of the net monthly income. Accordingly, the bank has to fix the tenure or adjust the loan amount.

Can I offer the same property as security that which I had provided for a home loan?

Yes, you can offer the same property subject to satisfying the LTV ratio of both the loans put together. This example can help you to understand better.

  • Housing Loan outstanding amount - 10 Lakhs
  • The market value of the property - 80 Lakhs

If you satisfy the income criteria for a home loan and Loan Against Property, the maximum credit you can get will be calculated as follows.

  • Security required for housing loan - 90%, say approximately 12 Lakhs
  • The balance of 68 Lakhs is available as collateral for the Loan Against Property
  • Against this security, you can get a maximum loan of 44 lakhs (around 65%)
  • Therefore the total exposure will be 54 lakhs (LTV 67.50% - acceptable)

Under such circumstances, do you have to create a new equitable mortgage?

You have to create a new equitable mortgage to cover the Loan Against Property. The registration of the MOD depends on the state where you reside and the total loan exposure. If you have already registered the mortgage for an amount more than 54 Lakhs, you do not have to register it again. Otherwise, you have to do so.