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Loan against Property Interest Rate
What is Loan Against Property?
A loan against property (LAP) is exactly what the name signifies—it is a loan that is taken against the mortgage of a residential or commercial property, or plot. The property's market value is assessed before sanctioning the loan, and if the title deeds are found to be clear and free of any legal encumbrances, the loan is given as a certain percentage of the property's current market value. Depending on the lender, the loan amount could range anywhere from 40 per cent to 60 per cent of the assessed market value.
The pre-requisite to avail a loan against property is that there should be no legal encumbrances to the property and the title should be in your name. The end use of a loan against property is not restricted and could be used for a multitude of your requirements provided it is legitimate.
Applying for a loan against property can be a great way to get a loan to meet your financial needs without selling off your assets. You get a much larger amount, depending on the value of the property you mortgage when compared to a personal loan. This way, you get to keep your property, which, under normal conditions, would naturally tend to accrue in market value over the years.
A loan against property is one of the most popular retail loans available in the market due to its lower interest rates and higher loan amount disbursal – of course the loan amount sanctioned depends on the property. You can apply for a loan against property in any of the leading private / public sector banks and NBFCs in India.
Loan against Property Interest Rate
Since LAP is a secured loan, i.e., your property is secured as collateral against the loan, the interest rates are low. Also, it translates to a higher loan amount disbursal depending on the property's market value. The interest rate on a loan against property could range anywhere from 11% to 20% per annum or more depending on your individual credit history and a variety of other factors.
How to apply for a Loan Against Property
You could visit your nearest lender for advice on whether you qualify, the documentation required, and for help in the application process.
If you have a good relationship with your existing bank/banks, you could be eligible for more favorable offers, like no prepayment / part prepayment penalty, lower interest rate, etc. You could call up their customer care and have them contact you with the most suitable offer.