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Knowing the interest rate before applying for a loan against property in India is crucial because it will impact your monthly EMIs as well as the total repayment amount. When you continue to monitor current property loan interest rates and check your loan against property eligibility, you can get the best offer and avoid overpaying.
What is Loan Against Property?
A loan against property is a secured loan in which you apply for funds against commercial or residential property. Funding from a loan against property is mainly used for significant expenses such as education costs, medical bills, or business expansion. Since it’s a secured loan, interest rates are lower than unsecured loans.
Current Loan Against Property Interest Rates in India
In India, as of 2025, the interest rate of a loan against property ranges from 8.75% to 11.50% per annum. However, this can vary depending on the lender and the borrower’s profile. Leading financial institutions such as PNB Housing offer competitive terms that depend on the borrower’s individual suitability, the loan amount, and the loan term.
Factors Affecting Loan Against Property Interest Rates
- CIBIL score and credit history of the borrower(s): If your score is greater than 750, you have a better chance of receiving a good interest rate.
- Loan amount and tenure: Large principal amounts and longer repayment periods can lead to higher interest rates.
- Property type, value, and location: Properties situated in good locations and in good conditions help obtain better interest rates.
- Market indicators (MCLR/Repo rate): Any revisions in these policies will lead to changes in the LAP rate as well.
- Policies of lender/ NBFC: Each lender has different risk criteria and rates to assess your eligibility.
Loan Against Property Eligibility Criteria
- Age, income, and employment: Self-employed and salaried individuals between the ages of 25 and 65 are generally eligible.
- Minimum credit score: A person with a score of 750 or above is generally eligible for the loan.
- Property ownership and valuation: The borrower must have the property in their name and provide undisputed title documents.
- Loan-to-value ratio and other requirements: Generally, lenders approve loans of up to 50% to 70% of the fair market value, depending on your repayment capacity.
Fixed vs Floating Interest Rates for LAP
- Fixed interest rate: Interest rate stays the same for the entire duration of the loan, making budgeting and planning easy.
- Floating interest rate: This interest rate changes with market conditions, so you can potentially save money if rates fall.
- Pros and cons: Fixed interest rates offer comfort and certainty, while floating interest rates offer flexibility and potential long-term benefits. However, you may not be able to capitalise and save interest when the rates go down if you choose fixed rates. Similarly, in floating rates, your repayment schedule will change as the rate changes, leading to uncertainty.
Tips to Get Better Loan Against Property Interest Rates
- Improve credit score: Paying dues on time, clearing existing debts, and maintaining a good utilisation ratio can help improve your score.
- Keep a low debt-to-income ratio: this means an improved repayment capability and reduced risk for the lender.
- Check the rates: Compare interest rates online to see which has the best rates.
- Discuss the property’s value and the term of the loan: If the property is high-value, this will help in getting better terms.
- Add a Co-applicant: It may improve your chances of approval to apply jointly with someone who has secure and stable income in addition to a good credit profile.
Conclusion:
Being informed and proactive will help you borrow affordably. Digital resources, such EMI calculators and eligibility calculators are a great way to compare and assess your options and apply with confidence.