These securitized loans could offer a higher loan quantum at lower interest rates than unsecured loan products like a personal loan.
If you have a big-ticket financing requirement, like to fund a child’s higher education or wedding or to start a business or to tackle a medical emergency, a loan against property (LAP) could be a viable option for you. These securitized loans could offer a higher loan quantum at lower interest rates than unsecured loan products like a personal loan.
That being said, keep in mind a few important things before going for a big-ticket financing facility like a loan against property. Firstly, most lenders usually sanction a loan amount of up to 75% of the pledged property’s current market value. However, you should not over-borrow just because you’re eligible for a higher loan quantum and stick to your exact financing requirement so that it’s easier for you to clear your loan in full on time. All your debt obligations combined shouldn’t ideally exceed 50% of your household income.
Secondly, despite being a collateralized loan product, your income and credit score are taken into consideration while sanctioning a loan against property. Meaning, you’ll get the best loan offers only when you have a sufficient income (making you capable of timely repayments) and a credit score of over 750-800. Thirdly, your loan application could be rejected if there’s no absolute clarity about the ownership of the pledged property, the paperwork is not in order or the property is in a dilapidated condition, according to BankBazaar.
You’ll also be well-advised to compare your options across various lenders to find the best loan offer. While doing so, check for things like the applicable interest rate, minimum and maximum loan quantum permissible, loan tenure flexibility, ease of loan processing, processing fee, part-prepayment and pre-closure charges (if any), late payment penalties, etc. The terms and conditions associated with a loan against property could differ from lender to lender, so you need to get complete clarity about the features applicable to your LAP before finalizing your decision.
To help you make informed decisions, here are the lowest advertised interest rates for a loan amount of up to Rs 10 lakh that are currently being offered by all BSE-listed public and private banks in the country. We’ve also provided indicative EMIs for a Rs 10 lakh LAP with a 5-year tenure for each of the banks — including SBI, HDFC and ICICI Bank — mentioned in the table below.
Do note, the interest rate applicable to you could be higher depending on your loan amount, property value and condition, LTV ratio, age, income, credit score, tenure, or any other terms and conditions of your chosen lender.
Interest Rates and Indicative EMIs on Loan Against Property of Rs 10 lakh for a 5-year Tenure
Disclaimer: The interest rates on LAP for all listed (BSE) public and private banks have been considered for data compilation. Banks for which data is not available on their website are not considered. Data collected from the respective bank’s website on March 16, 2021. Banks are listed in ascending order on the basis of interest rate. The lowest interest rate offered by the banks on loans of up to Rs.10 lakh and tenure up to 5 years is shown in the table. *The EMIs have been calculated on the basis of the interest rate mentioned in the table for Rs.10 lakh LAP with a tenure of 5 years (processing fee and other charges are assumed to be zero for EMI calculation). The interest rates mentioned in the table are indicative and they may vary depending on the bank’s T&C. Data compiled by BankBazaar.com, an online marketplace for loans, credit cards and more.