All you need to know about loan against property interest rates and charges in India 2022

In India, many people like to invest in property. They believe that it can not only secure their money but also help them make a profit. With a gradual increase in property prices or rentals, people can earn a huge profit.

However, there is one more way to put your idle property to use. This option helps you remain the property owner and meet your urgent needs for a huge amount of money. This option is a loan against property (LAP). Herein, you offer your land as a security to the lender and get a high-value loan at extremely low-interest rates.

When you give a property as a security, the risk reduces for the lender. In case of a default, there is a way for the lender to recover the money. This lower risk helps the lenders offer lower mortgage loan interest rates compared to other loans that do not require a security. You can use the money from the loan for your needs.

Although, it is vital to note that other than the interest rate, lenders also levy various other charges for this loan. Hence, it would help if you learn about the interest rate and charges before taking a LAP.

About Loan Against Property

A loan against property (LAP) is a secured loan. Hence, loan against property interest rates is quite low compared to other types of loans. Lenders offer repayment periods of up to 20 years on this loan and can offer up to 80% of the asset’s value. Such high-value loans can help you take care of your needs. Also, the low-interest rate would mean lower EMIs. Hence, you can pay back without the loan taking a toll on your finances.

If you pay your EMIs on time and need some more money in between, you can apply for a LAP top-up. Herein, the lender will create another charge on the property and offer you more money per your needs. The same mortgage loan interest rate will apply in this case as well. There is no limit on the type of purpose for which a LAP can be used. You may even use the money for your personal or work-related needs.

Loan Against Property Interest Rates

The interest rate plays a huge role in a LAP. Loan against property interest rates can start from as low as 11.5% per annum. This is much lower than other types of loans. Such a low property loan interest rate means that your EMI will also be lower. This makes it easier for you to repay the loan on time. There are many factors that lenders will consider while deciding on the mortgage loan interest rate.

• CIBIL score: If you want the lowest interest rate, your CIBIL score must be 750+. This score shows you as a responsible borrower. Hence, the lender will offer you a low-interest rate.
• Amount: Many lenders vary their interest rates based on the value of the loan. The higher the loan amount, the lower the interest rate can be, and vice-versa. But you must only borrow the amount that you need.
• Track Record: You can easily track your repayment records. Lenders want you to have a good track record in terms of repayments. You must pay all your credit card bills and EMIs on time to get the best interest rates.
• Type of Property: Property location and condition also impact interest rates. Property at a prime location with a clear title will certainly attract a lower interest rate than other property options.
• Profile: Your profile in terms of age, salary/income, and ex-work also impact the property loan interest rate.

Loan Against Property Charges

Lenders levy a range of charges against a LAP. Here are some of the common charges that you will have to bear to get this facility.

• Processing Fee: This is the fee a lender charges to process loan applications. All lenders levy this charge, but the percentage can vary from lender to lender. Some levy it as a ‘%’ of the loan amount, while others may levy it as a fixed cost. During the festive season, some lenders offer waivers of processing fees as well.
• Legal and Technical Charges: When you apply for a LAP, lenders need to verify the title of the property. For this, they hire a lawyer who will check all the papers as well as the location of the property. These charges must be paid at the time of application and are non-refundable.
• Foreclosure charges: Many lenders allow you the option to prepay your LAP if you have spare funds. But to avail of this facility, you need to pay charges which may go up to 4% of the balance loan amount.
• EMI dishonour charges: If you fail to pay the EMI by the due date, the lender will levy a dishonour charge against your account. The lender will also charge a late payment fee and penal interest until you pay the given amount.
• Account Statement: Most lenders allow you to download the account statement online free of charge. Most lenders also mail you this statement every month by email. But if you need a physical copy of the account statement, you must pay this fee to the lender.
• CERSAI Charges: As the asset in question is land, the lender will create a charge on the property through CERSAI. This would need you to pay around Rs. 500 as the registration fee for CERSAI.

If you want the best deal for your loan against property, you must select a good lender. With Piramal Finance, you get high loan amounts and low interest rates. This will make it easier for you to pay for any urgent expenses without taking up any other loan. You can also learn more about LAP and its key aspects through a range of blogs and articles on its website.