Multiple banks. Different interest rates. Call it a "conflict of interest".
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    Loan Against Property Interest rates

    If you are running short of money, there are many ways of arranging it. You can take a loan against your property and arrange funds to fulfill your diversified personal and business needs. Many banks in India offer loan against property at attractive rates of interest.

    Know about Loan against Property (LAP)

    Loan against property is kind of secured loan. You can use your property as security and take loan against it. The amount received as loan can be used for accomplishing a variety of tasks such as arranging a pleasure trip, expanding business, buying new property, sending your children abroad for higher education and many more. Banks grants loans against both commercial as well as residential property. Land, self-occupied property, rented property and vacant property – they all qualify for loan against property. Any loan taken against your property can be repaid by using equated monthly installments (EMIs). Usually, loan against properties can be taken for a period of 1-15 years. Compared to personal loans, loan against properties are granted for a longer tenure.

    Interest rates applicable for Loan against Property

    Usually, banks charge lower rates of interest on loan against properties than personal loans. As the rate of interest is lower, equated monthly installments also turn out to be cheaper on loan against property than personal loans. Banks charges different rates of interest for different types of properties. The rate of interest charged on a residential property is different from the rate charged on a commercial property. Currently, the interest rates on loan against property range from 12% to 15.75%. Banks may also charge a nominal amount of 1 to 2% of the total loan amount as processing fees.

    Different bank charges different rates on LAP. For example, HSBC Bank charges the following rates of interest on loan against property:

    • Regular: 10.60%
    • Smart: 11.10%

    The above-mentioned rates apply for both salaried & self-employed employees. Similarly, the State Bank of India charges 12.50% on loan against ornaments and mortgage of property.

    *** Interest rates charged by banks of loan against property are subject to change from time to time.

    Who is eligible for LAP?

    A person can Apply for a Loan against Property, if he/she fulfills the following eligibility norms:

    • Any salaried professional who is a permanent employee of an organization.
    • Other professionals such as architects, chartered accountants, doctors, engineers, dentists, cost accountants, company secretary, and management consultants are also eligible.
    • Self- employed individuals who come under income assessment are also eligible for loan against property.

    Bank will consider your total monthly income, savings, debt obligations, property value, repayment capacity, total assets, age, qualifications, number of dependants, spouse’s income, legal and technical aspect of your property, and your CIBIL record before approving your loan against property application.

    How much amount can I get as loan against property?

    Banks normally offer 40% to 70% of your property value as loan against property. Based on the total value of your property and your loan repayment capacity, bank will grant you the amount against your property. For example, the State Bank of India offers 60% of your property value as LAP which you repay in 60 monthly equated installments.

    Thus, a loan against property is one of the easiest ways to receive funds and fulfill your multiple needs.

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