Finance3 Essential Things to Know Before Taking a Loan Against Property

sharmaamrita852March 6, 2020368 min

We all face some financial issues, and we end up delaying our plans. Or, we start to look for other options to fulfil the requirement of funds. We ask our relatives and friends for some funds. But sometimes that is not a suitable option. 

You can always rely on banks and other lenders to grant us a loan. But high-interest rates on a personal loan might be a problem if you are already running out of money. In a case like this, you take a loan against property. It is a secured loan as the property documents are provided as collateral. The interest rates on this type of loan are relatively cheap. The lenders also have ownership rights until the loan is repaid. So, the borrower can get a loan which is equal to the value of the property. You can get a high amount with low-interest rates. And it will always be beneficial to the borrower as he/she will still be the owner of the property by law. 

Here are 3 things one should know before taking a loan against property –

  • The evaluation process of the property –

The best thing about getting a loan against property is that you can take it against a property you are already living in or rented out. But the property should be owned by the borrower, or if there are multiple owners, then they all should take a combined loan against that property. 

Once you apply for a LAP, the lender will check the quality of the property and its value will be evaluated as compared to the market value. If you are taking a loan from the bank, then you might only get 40%-60% of the market’s value. The amount of the loan also depends on the condition of the property. 

  • Loan against property interest rates –

The loan against property interest rate is comparatively low and ranges from 9% to 15% per annum. It depends on the lender. You can get a loan with a long repayment period as it is a secured loan. It can range from 7 to 15 years.

  • Eligibility criteria –

Every bank or lender has different eligibility criteria. The most important criteria for taking a LAP is the credit score of the borrower. The lender also reviews the debts, income and repayment track record and age of the borrower. The age of the borrower shouldn’t be more than 70 years. As the lender expects the borrower to pay off the loan before retirement. 


There are so many schemes available for a loan against property. You can choose one that best meets your requirement. LAP is the most suitable option if you are looking for a huge loan. Just remember to make the repayment of the loan on time.


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