Loan Against Property Interest Rates
Advantages of availing loan against property
The benefits of availing loan against property is given as below:
- Lower interest rates: Interest rate offered on loan against property is lower than the interest rates offered on unsecured loans like personal loan.
- Optimum use of the property: While the property serves as collateral for the loan, it also continues to serve its original purpose.
- Longer repayment period: Loan against property has longer repayment tenure of up to 20 years, thereby, lowering the EMIs.
- Higher sanction amount: Banks and HFCs usually offer up to 75% of the property value.
- Higher scope of availing loan eligibility for applicants having lower credit score: Loan against property is secured in nature, i.e., it is backed by the underlying property. So, in case of loan default by the LAP borrower, the lender has the right to dispose off the underlying property to recover the money. This reduces the credit risk for the lenders and thereby, increases the chances of securing finance despite having low credit score.
Compare Interest Rates on Loan Against Property for Top Banks & HFCs
| Name of the Lender | Interest Rate (% p.a.) | |
|---|---|---|
| State Bank of India | 10.00 - 11.30 | Apply Now |
| Axis Bank | 10.50 - 10.95 | Apply Now |
| Bank of Baroda | 10.85 - 16.50 | Apply Now |
| ICICI Bank | 10.85 - 12.50 | Apply Now |
| Standard Chartered Bank | Starts from 9.25% | Apply Now |
| HSBC Bank | 9.75 - 14.00 | Apply Now |
| Union Bank of India | 10.45% - 13.10% p.a. | Apply Now |
| PNB Housing Finance | 9.25 - 15.00 | Apply Now |
| IDFC First Bank | 9.00 - 16.50 | Apply Now |
| HDFC Bank Limited | 9.50 - 11.00 | Apply Now |
| L&T Housing Finance | 9.50 onwards | Apply Now |
| LIC Housing Finance | 9.50 - 11.55 | Apply Now |
| Godrej Housing Finance | 9.75 onwards | Apply Now |
| Indiabulls Finance | 9.75% p.a. onwards | Apply Now |
| Tata Capital | 10.10 onwards | Apply Now |
| Bajaj Housing Finance | 9.75 - 18.00 | Apply Now |
| Punjab National Bank | 10.40 - 12.75 | Apply Now |
Factors Affecting Loan Against Property Interest Rates
- LTV Ratio: The Loan to Value Ratio (LTV) is the amount of the loan compared to the value of the property. Typically, lenders offer up to 70% of the property's value as the maximum loan amount. This means the rest of the property's value needs to be covered by the borrower's own funds. Borrowing less than the maximum amount can lower the LTV ratio, increase your eligibility for the loan, and even lead to lower interest rates. It's important to note that LTV ratios vary depending on the type of property.
- Credit score: A good credit score shows that you're good at managing money, so banks are more likely to give you loans with lower interest rates. If your score is low, you can boost it by getting a Step UP Credit Card from SBM Bank India Ltd. It's free for life and can help improve your credit score over time.
- Women applicants: Many lenders provide a discount on the interest rate for loan against property, usually around 0.05%, for women borrowers. Therefore, having a female family member as a co-applicant can help you qualify for a lower interest rate.
- Loan amount: Banks and housing finance companies (HFCs) often set different interest rates for loans against property based on the loan amount. Usually, if you're borrowing a smaller amount, like Rs 30 lakh, you might get a lower interest rate compared to if you're borrowing a larger sum.
- Income and employment: Lenders consider your income, job type, and where you work when deciding on the interest rate for your loan against property. Typically, they give lower rates to salaried people because their jobs are more stable. Self-employed individuals, especially those with unpredictable income or just starting out, usually get higher interest rates because their income might not be as consistent.
- Type of property: Some lenders may charge lower interest rates for loans against self-occupied residential properties compared to rates for commercial properties or properties that are not self-occupied.
Tips to Avail Mortgage Loan at Low Interest Rates
Here are some simple tips to help you get a loan against your property at lower interest rates:
- Keep your credit score high. Aim for 750 or above as it shows lenders that you're reliable.
- Start by checking with the lenders where you already have accounts. They might offer better deals to existing customers.
- Look out for special offers during festive seasons when lenders may provide interest rate discounts.
- Use online financial platforms to compare offers from different lenders easily.
FAQs On Loan Against Property Interest Rate
1. How much loan can be taken against property?
Lenders provide financing for up to 75% of the property's market value. Alongside the property's value, they also consider the applicant's repayment capacity when determining the maximum loan amount they're eligible for.
2. How can I know the total interest cost payable on the loan against property?
To figure out how much interest you'll pay on your mortgage loan, you can use a loan against property EMI calculator. Just input the amount you're borrowing, how long you'll be paying it back, and the interest rate. The calculator will then show you your monthly payments and the total interest you'll pay over the loan term.
3. How is my eligibility for loan against property calculated?
When determining whether someone is eligible for a loan against property, lenders typically consider several factors. These include the applicant's age, occupation, income, stability of their business or job, existing loan repayments, and the location and characteristics of the property being offered as collateral.
4. What are the end uses of loan against property?
Apart from speculative purposes, you can use a loan against property for various personal and business needs. This could include covering expenses for weddings, expanding your business, consolidating debts, and more.
5. Which bank is best for availing mortgage loans?
When looking for a loan against property, it's smart to choose a lender with the lowest interest rates because it means lower monthly payments and less interest paid over time. But it's also important to consider other factors like how long you'll have to repay the loan, how much you can borrow, the loan-to-value ratio, any fees involved, and how quickly you can get the money. You can check out different banks and housing finance companies online to compare their offers and find the best one for you.
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