The lending market in India offers several options to individuals looking for long-term financing. One can select purpose made credits, like home loans to purchase, construct, or expand residential properties; or, can opt for a loan against property if they do not want any end-usage restriction and want to utilise the sum for their unique financial requirements.

Loan against property is a secured loan, disbursed to the borrower against a mortgaged property. It has become one of the most preferred types of long-term, secured finance available in the market, with an almost 12% growth between FY 2017 and 2018. Studies show that an increasing number of borrowers are opting for these types of credits instead of other conventional loans; an affordable loan against property interest rate, flexible tenure, borrower-friendly terms and several other features make them better suited to fund a variety of financial requirements.

Several financial institutions offer loan against property to eligible borrowers. Both private and public sector lenders offer this type of credit, providing a prospective applicant with a wide selection of different plans to choose from. Moreover, a saturated market and strict monitoring policy of the Reserve Bank of India allows lending organisations to keep the interest rate within an affordable amount.

Property loan interest rates usually hover around 15% onwards, while some lenders offering as low as 10.10% to eligible applicants. Usually, public sector financial organisations offer lower EMIs to customers. However, certain Non-Banking Financial Institutions also offer such low rates for a loan against property in India.

Interest Rates For A Loan Against Property

The lowest available rate of interest offered by NBFCs can reach as low as 10.10%. Bajaj Finserv, one of the largest private lending institutions in India, offers a rate of interest ranging from 10.10% to 11.50% to salaried customers looking for a loan against property. For self-employed individuals, the mortgage loan interest rate can reach from 10.50% to 14.50% depending on their eligibility criteria and a few other factors that affect the interest rate of a loan against property.

Such an affordable interest rate allows a borrower to repay the credit without straining the finances. Also, Bajaj Finserv charges only the minimum associated fees and charges on a Loan Against Property. Let’s take a look.

  • Processing fee – Up to 1.5%.
  • Statement charges – Rs. 50.
  • One time mortgage origination fee – Up to Rs. 4999.
  • Foreclosure charges – 4% + applicable taxes in case of fixed rate of interest, and nil in case of floating rates of interest (provided a borrower wishes to foreclose the line of credit within less than one month’s period).

They do not levy some fees like interest and principal statement charges. They also provide pre-approved offers that make availing such credits hassle-free and time-saving. Such offers are available on several financial products, including a loan against property, home loan, personal loan, business loan, etc. 

Availing The Lowest Rate Of Interest

The risk associated with a loan against property is significantly smaller as these types of credits are disbursed against a mortgaged asset. A prospective applicant only has to fulfil some basic eligibility criteria to enjoy the lowest property loan interest rate. Usually, companies look for individuals who have a steady source of income and a good credit history.

An applicant’s creditworthiness is one of the most crucial things determining his or her loan’s interest rate. If they have a history of timely repayments and no record of defaulting, they will be considered as creditworthy. Lenders are likely to offer lower rates because they have a higher chance of timely repayment.

One can also improve their fixed obligation to income ratio to avail a lower interest. Financial experts suggest repaying all debts before availing a long-term loan. Borrowers can follow several methods to repay existing loans, including debt consolidation, prepayment, etc.

Another method to lower the rate of interest is by opting for a lower principal amount. A larger down payment can also help lower the property loan interest rate significantly and help you save a substantial amount during repayment. 

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