• Loan Against Property Interest rates

    Loans against property, or mortgage loans, are secured loans where borrowers have to pledge their property (residential or commercial) as collateral. Interest rates offered on these loans range from 8.00% p.a. to 10.00% p.a. while the repayment tenure offered by lenders is generally up to between 2-20 years.

    Loan Against Property Interest rates offered by Top Financial Lenders

    Listed below are the interest rates offered by reputed financial lenders along with other key details of the product:

    Lender’s Name Interest Rate Loan Amount Tenure
    IDFC First 8.00% p.a. onwards Up to Rs.7 crore Up to 20 years
    HDFC Bank 8.00% - 8.95% p.a. As per the terms and conditions set by HDFC Bank Up to 15 years
    ICICI Bank 8.35% - 10.00% p.a. Up to Rs.5 crore Up to 15 years
    State Bank of India 8.45% - 10.00% p.a. Up to 7.5 crore 5-15 years

    Things to Keep in Mind Before Availing Loan Against Property

    Customers who are new to the process of availing a loan against property can keep the steps mentioned below in mind:

    • Check your eligibility

    Customers can make use of the loan against property eligibility calculators prior to applying for the loan. The eligibility calculator will take into consideration details such as one’s income, the value of the property and several other factors. Using the eligibility calculator, the customer can assess the loan amount he/she will be eligible to avail.

    • Calculate the EMI

    As part of planning one’s finances prior to applying for the loan, one should calculate the EMI amount and know how much he/she would have to set aside from their monthly net income to pay for the monthly installments.

    • Keep the property records in place

    The customer has to ensure that all the property certificates are in place and are in his/her name to avail the loan. Some of the property certificates that the lender would request to submit are the sales deed, lease deed, registration certificate, House Tax Return certificate, approved building plan that has been attested by the Municipal Corporation, etc.

    • Shortlist lenders based on their offers

    Make a comparative analysis between lenders offering a favorable loan amount relative to the interest rate. While analyzing, check for the fees and charges being levied by each lender, along with the loan tenure being offered.

    Customers can calculate their eligibility and the EMIs on the website of BankBazaar and make a suitable decision on the loan amount to be availed and the monthly installments based on their finances.

    Loan Against Property Process in Steps

    Listed below is the general process to avail a loan against property:

    • Choose a reputed lender offering the best loan against property deal in the market, one that suits your finances.
    • On the website of the lender, fill in the online application form. Enter your personal details, income and any other required information.
    • Enter the details of the loan you’d wish to avail – loan amount, tenure, etc.
    • Based on the information that you have mentioned, the lender will calculate your eligibility.
    • The lender will then collect the required documents and begin the verification process of your documents as well as that of the property and carry out the property valuation process.
    • If the lender is satisfied at the end of the verification process, then the loan sanction letter will be sent to your postal address.
    • Prior to the loan disbursement, you will have to submit the original documents of the property.

    Loan Against Property EMI Calculator

    To plan their finances in advance, customers can facilitate the use of the EMI calculator tool to know how much they would have to set aside every month to repay the loan. The EMI calculator takes into consideration factors such as the loan amount availed, the interest rate applicable, the processing fee, and the tenure.

    Illustration:

    Let’s assume that Mr. Raidu availed a Loan Against Property of Rs.2.5 lakh for a tenure of 12 months, with an interest rate of 8%. Taking into consideration the principal amount, the interest, processing fee divided by the tenure, Raidu will have to pay an EMI of Rs.21,747 to repay the loan during the tenure.

    Year Principal Paid(A) Interest Paid(B) Total Payment (A+B) Outstanding Balance
    2021 Rs.60,643 Rs.4,598 Rs.65,241 Rs.1,89,356
    Oct Rs.20,080 Rs.1,667 Rs.21,747 Rs.2,29,920
    Nov Rs.20,214 Rs.1,533 Rs.21,747 Rs.2,09,705
    Dec Rs.20,349 Rs.1,398 Rs.21,747 Rs.1,89,356
    2022 Rs.1,89,356 Rs.6,367 Rs.1,95,723 Rs.0
    Jan Rs.20,485 Rs.1,262 Rs.21,747 Rs.1,68,871
    Feb Rs.20,621 Rs.1,126 Rs.21,747 Rs.1,48,250
    Mar Rs.20,759 Rs.988 Rs.21,747 Rs.1,27,491
    Apr Rs.20,897 Rs.850 Rs.21,747 Rs.1,06,594
    May Rs.21,036 Rs.711 Rs.21,747 Rs.85,558
    Jun Rs.21,177 Rs.570 Rs.21,747 Rs.64,381
    July Rs.21,318 Rs.429 Rs.21,747 Rs.43,063
    Aug Rs.21,460 Rs.287 Rs.21,747 Rs.21,603
    Sep Rs.21,603 Rs.144 Rs.21,747 Rs.0

    Tricks to reduce the loan against property interest rate

    Give below are some key points one can take into consideration to reduce the interest rate of a loan against property:

    • Find out the applicable interest rate for different loan slabs. For example, it is quite possible that the interest rate will be lower for a loan in the Rs.30 lakh range than one in the Rs.20 lakh range.
    • Choose the tenure accordingly as it has a direct effect on the interest rate that will be offered by the lender.
    • Look out for lenders offering interest rate offers on loans.
    • Do not make multiple applications with various lenders as every application rejection will reduce one’s CIBIL score and a low CIBIL score will lead to a higher interest rate offered by the lender.
    • Opt for a loan amount that is within your affordability.

    Documents required for loan against property

    Listed below are the general documents that the borrower will have to submit:

    • Identity proof – Passport, Aadhaar card, PAN, etc.
    • Address proof – Aadhaar card, Driving License, Voter ID card, etc.
    • Form 16
    • IT returns certificate
    • Bank statements
    • Salary slips
    • Income proof documents
    • Property documents – Sales deed, Registration certificate, Property tax receipt, building plan that has been approved by the Municipal Corporation, etc.

    FAQs on Loan Against Property Interest Rates

    1. Is it possible to apply for a loan against property if the property is joint owned?

      Yes, it is possible provided that the co-owner of the property is the co-applicant as well. One can even avail a higher loan amount when availing a loan against a joint property.

    2. Should I opt for a fresh loan against property application or choose a top-up of the existing loan? Which option is more beneficial?

      Opting for a top-up will be beneficial in many ways as you wouldn’t have to go through the documentation and verification process again and the interest rate and EMI might be lower as well.

    3. Is it possible to apply for a Loan Against Property if I have an existing loan?

      Only if you do not have an existing loan with the same lender.

    4. Is it better to opt for a higher tenure since the EMI will be lower?

      While it is true that the EMI will be lower if you opt for a higher tenure, choosing a shorter tenure will result in your repaying the bank a lot less money due to the applicable interest rate. The longer the tenure the higher will be the interest that you will have to repay the bank.

    5. Are there any charges apart from the interest rate when availing a loan against property?

      You will have to pay the processing fee and applicable service tax and other charges when availing a loan. If you wish to close the loan before the set tenure, you will have to pay the foreclosure charges.

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