Introduction
When you have an urgent financial need for money, getting a personal loan may not always be possible. In some cases, various banks and financial institutions offer consumer loans against their assets. These loans are called loans against property. It’s also known as LAP. Homeowners can borrow money using the equity in their homes as collateral. Interest rates on these types of loans are generally lower than on other types of consumer credit.
Table of Contents
- What Is a Loan Against Property?
- How to Get a Loan Against Property?
- Difference Between Home Loan & Loan Against Property
- Loan Against Property: Banks Interest Rates in 2024
- Loan Against Property Qualification
It is making them an attractive option for those in need of funds. Home equity loans often have flexible repayment terms. It can be used for various purposes, such as home improvements, debt consolidation, or significant expenses. It is essential for homeowners to carefully consider their financial situation and loan terms before taking out a home equity loan. They can ensure they can afford the payments and not put their home at risk.
What Is a Loan Against Property?
A loan against property (LAP) is a property-secured loan, a bank or financial institution’s pledge on your property. Assets you can pledge include your house, land, or commercial estate. For this reason, they are also called mortgage loans.
These types of loans improve credit scores and offer low interest if paid on time. However, all the documents related to the mortgaged property should be completely legal. The lending institution holds the property as collateral until the loan is repaid.
How to Get a Loan Against Property?
You can apply for a loan against property online and offline. Visit a bank branch or a financial institution to use offline. You can talk to a loan officer who can guide you through the application process. You have to fill out the application form on the lender’s website. One can apply for a property loan online by submitting the required documents electronically.
To get a loan online, visit your lender’s website and submit your application. After you apply, a bank employee will see the mortgaged property. A mortgage loan will allow you to get a loan sooner. The bank will then assess the property’s value and financial situation to determine if you qualify for the loan.
Once approved, you will receive the funds and can begin using them for your intended purpose. Online mortgage loans are typically faster and more convenient than traditional methods. It is essential to carefully review the terms and conditions of the loan before accepting it.
Difference Between Home Loan & Loan Against Property
A property loan is often confused with a home loan. Openplot gives you a detailed breakdown of the trends and cuts through all of this confusion. Below, we briefly present the differences between home and property loans for your better understanding.
| Home Loan | Loan Against Property | |
| Purpose | Home loans are used to purchase a new house, plot or property. | A loan against property allows you to get money for your personal needs by mortgaging your property. |
| Interest Rate | Less than the interest rate of the loan on the property. | A home loan is more than just an interest rate. |
| Loan-to value ratio. | Can go up to 90%. | Usually between 55-70% |
| Tenure | Up to 30 years | Up to 20 years |
Also read: Home Loan Down Payment: What is That and How to Calculate?
Loan Against Property: Banks Interest Rates in 2024
Loans against property interest rates in 2024 by banks are expected to remain competitive as financial institutions continue to offer attractive rates to attract borrowers. Customers can expect to see a range of options available.
Allowing them to choose the best loan against property deals for their financial needs. With the increasing competition in the market, banks may also introduce special offers and discounts on interest rates to stay ahead. Customers should compare different loans against property options before making a decision.
| Banks | Interest Rates |
| Axis Bank | 10.50% – 10.95% |
| Bank of Baroda | 10.85% – 16.50% |
| Bank of India | 11.25% onwards |
| Bank of Maharashtra | 10.45% – 11.95% |
| Central Bank of India | 9.75% – 13.00% |
| Federal Bank | 12.60% onwards |
| HDFC Bank Limited | 9.50% – 11.00% |
| ICICI Bank | 10.85% – 12.50% |
| IDFC First Bank | 9.00% – 16.50% |
| Karur Vysya Bank | 10.20% – 12.95% |
| Kotak Mahindra Bank | 9.15% onwards |
| Punjab National Bank | 10.40% – 12.75% |
| State Bank of India | 10.00% – 11.30% |
| Union Bank of India | 10.45% – 13.10% |
Loan Against Property Qualification
When it comes to applying for a loan against the property interest rate of 2024, each lending institution has its own unique criteria to determine eligibility. To increase your chances of approval, you should assess your ability to repay the loan.
Factors such as your credit history, income, and employment status are all usually taken into account as part of the eligibility criteria. So, listed below are all the required documents to submit to the lender and demonstrate your financial stability.
- A source of income is a must for the borrower.
- A credit score of 750 or above (This has nothing to do with your eligibility for a loan, but it does help in getting a loan at attractive interest rates.)
- Property Type (Commercial, Residential, Self-Occupied and Non-Occupied)
- LTV ratio: How much you borrow against the value of your property. the common limit is 70% of the property value. Lower is better.
Also read: Home Loan Tips You Should Know Before Applying
Conclusion
A loan against property is a viable option for people looking to leverage their property for financial needs. It offers lower interest rates than personal loans. It can be used for various purposes, like business expansion or debt consolidation. The loan amount is usually higher than a personal loan. However, it is essential to carefully consider the terms and conditions of the loan to ensure that it meets your financial goals and capabilities.
Also read: Interest in 3 BHK Houses in Ahmedabad Has Increased by 86%.