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Ananya Shrivastava
Ananya Shrivastava is a Content Writer at LoansJagat, specialising in finance-focused news, blogs, and long-form articles on Indian markets, RBI policy, personal finance, and lending. She has authored over 450 blogs and 250 news pieces, combining technical knowledge with rigorous research to simplify complex financial concepts into clear, engaging content. With a marketing-driven lens and sharp editorial judgment, she consistently achieves top Google rankings while ensuring every claim is backed by verified data.
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A loan against property lets you borrow up to 65% of your property's market value at interest rates starting near 9.50% per year. It costs less than a personal loan, runs for tenures up to 15 years, and lets you keep using the property while you repay.
A loan against property (LAP) is a type of secured loan in which the borrower pledges his/her residential or commercial property to the bank/NBFC. Every individual above 18 years who owns property in India, irrespective of being salaried or self-employed, can avail of the loan.
It can be taken to expand their business, pay off medical expenses, educational expenses, wedding expenses, and debt consolidation. The application is possible both online and offline through branches. It is disbursed within 1 to 2 weeks.
A loan against property is a secured loan given against the market value of a property you already own.
You mortgage your house, shop, office, or land to the lender. Ownership stays with you. The lender only holds a charge on the property until the loan closes. Default triggers recovery proceedings under the SARFAESI Act, allowing the lender to sell the property to settle dues.
Most banks accept self-occupied, rented, or vacant residential property. Commercial property is accepted too, usually at a lower loan-to-value ratio and a marginally higher rate.
A loan against property will have lower interest rates when compared to an unsecured personal loan, as your property will be pledged for the loan.
Lower interest rate: The loan against property interest rate offered by HDFC Bank is from 9.50% to 11%. This interest rate is quite lower than personal loan interest rates.
Higher loan amount: Banks approve higher loan amounts in the case of secured loans. SBI limits its loan-to-value ratio to 65% for loans from ₹1 crore to ₹1 crore, and 60% for loans from ₹1 crore to ₹5 crore.
Longer tenure period: The maximum tenure offered by HDFC Bank for a loan against property is 15 years. Higher tenure makes your EMIs easy to pay.
No fixed end use: LAP funds can go toward business needs, medical bills, a wedding, or education, without the usage restrictions attached to a home loan.
Continued ownership: You keep living in or renting out the property while repaying. Only the title deed sits with the lender as security.
Debt consolidation: You can consolidate different personal loans and credit cards into a single LAP that has reduced EMI.
The lowest interest rate for a loan against property in India ranges from 9.50% to an annual percentage above that, depending on one’s credit score and income level.
Your final rate depends on CIBIL score, income stability, and the property's location. ICICI Bank requires a CIBIL score of 700 or above to qualify for a loan against property. A higher score generally secures a lower rate.
The RBI held its repo rate at 5.25% through its February, April, and June 2026 meetings, which has kept floating LAP rates fairly steady this year.
Banks decide your loan amount using the loan-to-value (LTV) ratio, which caps how much of your property's market value they will lend.
Residential property gets a higher LTV than commercial or industrial property, since it carries lower resale risk for the lender. As an example, a flat valued at ₹80 lakh, under a 65% LTV cap, would qualify for a sanction of up to ₹52 lakh, subject to income eligibility.
Tax benefits on a loan against property depend entirely on how the funds are used.
*T&C Apply
Any salaried individual or any self-employed professional who is an Indian citizen and has property can apply.
SBI accepts applications from salaried individuals and professionals who are resident Indians or income tax assessees. It also accepts applications from non-resident Indians having property in his/her name or the name of his/her parents, child, or brother/sister.
Eligibility Criteria are as follows:
Required documents are proof of identity, proof of address, proof of income, and documents of property. Some documents are:
Document not being available is still one of the major reasons for delay in the LAP application process.
Mr Rohan Mehta, aged 38 years, textile trader from Surat, has a residential flat of value ₹75 Lakh. He was in need of ₹35 Lakh to upgrade his warehouse and pay two expensive business loans.
He applied for a loan against property at 10.10% per annum, based on SBI's 1-year MCLR plus spread. The bank sanctioned ₹35 lakh, within the 65% loan-to-value cap on his flat.
His EMI for a 15-year tenure works out to roughly ₹37,500 per month, well below what he paid earlier across two unsecured business loans at 16% to 18% interest. Since he used the entire amount for business purposes, Rohan can also claim the interest paid as a deduction under Section 37(1).
The biggest risk with a loan against property is losing the property on default.
LAP is a secured loan, so the bank has legal recourse under the SARFAESI Act to auction the property after sustained non-payment. Other risks worth weighing:
The interest cost on a loan against property is lower than that on a personal loan for the same amount, tenure is longer, and there is no restriction regarding its end use. This property will act as a security throughout the term of the loan; hence, take a loan according to your repayment capacity and ensure the interest rate, LTV, and other fees from the bank of your choice.
Minimum interest rate for LAP is around 9.50% per annum, based on credit score and financial position.
Loan amount is up to 65% of the market value of the property, subject to the limit of ₹1 crore, according to the loan-to-value ratio tables of SBI.
No. All major banks insist on income proof in the form of salary slips and Form 16 for salaried persons or income tax returns of self-employed applicants.
The maximum tenure of most banks, including HDFC Bank and SBI, is 15 years for a loan against property.
Only if it is used for business purposes. Interest paid for such a loan is deductible as per Section 37(1).
CIBIL score of 700 or more is required by ICICI Bank. A better CIBIL score enhances the probability of obtaining a low-interest loan.
Yes. An NRI having a property in his/her own name or in the name of his/her spouse, children, parents or siblings can apply for a loan at banks such as SBI.
Yes, in the case of a large amount. As the loan is backed by property, interest rates and repayment period will be comparatively lower in case of LAP.
The bank can proceed for recovery of the loan under the SARFAESI Act and sale of the property.
Individual borrowers on floating-rate loans generally face no prepayment penalty. Firms or companies as co-borrowers may face charges of 2% to 3%.
