A loan against property (LAP) is a secured loan that you can avail of by pledging a property (flats, houses, apartments) as collateral. It allows borrowers to access funds for personal needs, sudden medical expenses or business purposes. In addition, these loans come with lower interest rates and longer tenures due to their secured nature. Different financial institutions have their own rates for this loan.
Read on to know the LAP interest rates and top 5 financial institutions that provide LAP and tips to get better interest rates for loans against property.
Financial institutions offer borrowers the option of fixed and floating interest rates on their LAP.
Fixed interests remain fixed for the entire loan tenure and are not affected by market fluctuations. In most cases, they are 1-2% higher than floating interest rates. Floating interest rates change at regular intervals with changes in external benchmark rates.
The choice of fixed vs floating interest rates depend on the market trends and security. Fixed rates offer certainty when there is a chance of increasing market lending rates. In contrast, floating interest rates lead to more savings when the market lending rates decrease.
Here is a tabular representation of loan against property interest rates offered by top financial institutions in 2022.
|S No.||Name of the Financial Institution||Interest Rates Starting At|
|1.||Kotak Mahindra Bank||9.25% p.a.|
|2.||Axis Bank||8.90% p.a.|
|3.||HDFC Bank||8.75% p.a.|
|4.||ICICI Bank||8.35% p.a.|
Financial institutions do not offer the same LAP rates for all borrowers. Instead, it varies depending on the following key factors:
Navi offers home loan at interest rates starting from 7.39% p.a. It offers loans of up to Rs.5 crore with a tenure of up to 30 years. Besides the interest, the following additional charges and fees are also applicable.
|Processing Fees||Up to 2% of the loan amount|
|Legal and Valuation Charges||Rs. 5000|
|Prepayment charges (floating rates)||Nil|
|Prepayment charges (fixed rates|
and for business purposes)
|2% of the amount pre-paid|
|Foreclosure charges (floating rates)||Nil|
|Foreclosure charges (fixed rates|
and for business purposes)
|2% of the amount pre-paid|
A loan against property is an ideal solution for those willing to put their properties as collateral to get funds for immediate needs. You can apply for this loan to address medical emergencies, meet cash flow needs of your business or fund your child’s education. Due to their secured nature, loan against property interest slabs and rates is relatively lower. Moreover, they are quite easy to get and allow you to use your property as per your needs.
Ans: The amortisation schedule for a LAP gives a detailed breakdown of your monthly EMI, including the principal and interest component of each instalment. Initially, the EMI contains a higher interest component, and with each repayment, it decreases as the principal repayment increases.
Ans: Different financial institutions have their own eligibility criteria for LAP. Here are some standard eligibility criteria:
• Age: 21 to 65 years
• Employment: Salaried/self-employed
• Nationality: Residing Indian citizen
• Income: Regular and steady income
• Maximum loan amount: 50-60% of the property value
Ans: Most financial institutions require the following documents for LAP:
• Proof of identity and address: Voter ID card, Aadhaar card, PAN card etc.
• Property documents: Title deed, proof of no encumbrance, approved plans etc.
• Employee ID card
• Latest salary slip
• Bank account statement of previous 3 months
• Income Tax Returns
Ans: Having an insurance policy for a loan against property is recommended as it will safeguard your financial interest. It lowers the risks of default and covers loan repayment in case of any unfortunate event of death or disability.
Ans: The loan-to-value (LTV) ratio is the percentage of the property’s current valuation set as a maximum cap for a loan. LTV for a loan against property can be up to 80% of the property’s value depending on the financial institution, borrower’s profile and property value.
Are you looking to buy that house you’ve been eyeing 🏠 and you need a loan of up to ₹5 crore. Install the Navi app now and get instant in-principle approval right away! Interest rates starting at 8.60% p.a.
Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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