Introduction: What is a Loan Against Property (LAP)?
A Loan Against Property (LAP) is a secured loan where an individual or business pledges a residential, commercial, or industrial property as collateral to avail a loan. LAPs are widely preferred in India due to their lower interest rates, higher loan amounts, and longer tenures compared to unsecured loans.
Whether you’re a salaried employee looking to fund your child’s education or a business owner needing capital, a LAP can offer flexible financing without selling your assets.
Why Interest Rate Matters in LAP
The interest rate significantly impacts your overall repayment amount and EMI. Even a small difference of 0.5% can affect your monthly outgo and total interest paid over the tenure. Comparing LAP interest rates from top banks and NBFCs (Non-Banking Financial Companies) is crucial to making an informed decision.
Types of LAP Interest Rates
| Type of Rate | Description |
|---|---|
| Fixed Rate | The interest rate remains unchanged throughout the tenure. EMI stays constant. |
| Floating Rate | Varies with market-linked benchmarks like Repo Rate. EMI can increase or decrease. |
Most Indian lenders now offer floating rates linked to RLLR (Repo Linked Lending Rate) for transparency and quicker transmission of RBI rate cuts.
Top Banks/NBFCs Offering LAP in India – 2025 Interest Rate Comparison
Here is a comparison of LAP interest rates offered by major lenders in India:
| Bank/NBFC | Interest Rate (p.a.) | Processing Fee | Max. Tenure | Loan Amount |
|---|---|---|---|---|
| HDFC Ltd. | 8.90% – 10.25% | Up to 1% of loan amount | Up to 15 years | ₹5 Lakhs – ₹10 Cr |
| ICICI Bank | 9.00% – 10.50% | 0.50% – 1% | Up to 15 years | ₹10 Lakhs – ₹5 Cr |
| SBI (State Bank of India) | 8.80% – 10.15% | 0.35% (min ₹5,000) | Up to 15 years | ₹10 Lakhs – ₹7.5 Cr |
| Axis Bank | 9.15% – 11.20% | 1% of loan amount | Up to 20 years | ₹5 Lakhs – ₹5 Cr |
| Bajaj Finserv | 10.25% – 13.00% | Up to 1.5% | Up to 20 years | ₹5 Lakhs – ₹10 Cr |
| Tata Capital | 10.10% – 12.50% | 0.5% – 1.5% | Up to 15 years | ₹5 Lakhs – ₹3 Cr |
| PNB Housing Finance | 9.15% – 11.50% | 1% – 1.5% | Up to 15 years | ₹5 Lakhs – ₹5 Cr |
| Indiabulls Housing | 9.50% – 12.00% | 1% of the loan amount | Up to 15 years | ₹10 Lakhs – ₹3 Cr |
Note: Rates are indicative and subject to change based on credit score, borrower profile, and property type.
Factors Affecting LAP Interest Rates
1. Credit Score
Higher credit score (750+) generally results in lower interest rates.
2. Type and Location of Property
Properties in Tier 1 cities and in good condition fetch better rates.
3. Loan-to-Value Ratio (LTV)
Lenders usually fund up to 60-75% of the property’s value. Lower LTV may get you a better rate.
4. Income and Occupation
Salaried individuals with stable income enjoy lower rates than self-employed borrowers due to perceived risk.
5. Loan Tenure
Shorter tenures may attract slightly lower interest rates.
How to Choose the Best LAP Offer?
Here’s a simple framework:
| Criteria | Why It Matters |
|---|---|
| Interest Rate | Lower rate = lower EMIs and interest cost. |
| Processing Fee | High fees can increase upfront cost. |
| Prepayment Charges | Check if the lender charges penalties on early repayment (especially for fixed rates). |
| LTV Offered | Higher LTV allows you to borrow more. |
| Customer Service | Timely service is critical during processing. |
EMI Calculation Example
Suppose you take a LAP of ₹50,00,000 for 15 years. Here’s how EMI varies with interest rates:
| Interest Rate | EMI (Approx.) | Total Interest Payable |
|---|---|---|
| 8.90% | ₹50,500 | ₹41.00 Lakhs |
| 9.50% | ₹52,100 | ₹43.78 Lakhs |
| 10.25% | ₹54,200 | ₹47.55 Lakhs |
Use online EMI calculators to customize based on your loan details.
Benefits of LAP Over Personal Loan
| Parameter | Loan Against Property | Personal Loan |
|---|---|---|
| Interest Rate | 8.80% – 12% | 11% – 24% |
| Tenure | Up to 15–20 years | Up to 5 years |
| Loan Amount | Up to ₹10 Cr | Up to ₹40 Lakhs |
| Secured/Unsecured | Secured | Unsecured |
| Approval Time | 5–15 days | 24–72 hours |
Who Should Consider LAP?
Ideal for:
- Business owners needing working capital
- Salaried individuals with large, one-time expenses (like weddings, medical emergencies, or home renovation)
- Anyone with idle property seeking to unlock its value without selling it
Not Ideal for:
- People without owned property
- Those needing quick, small-ticket loans
Tips to Get the Best LAP Interest Rates
- Maintain a good credit score – Aim for 750 or above.
- Compare multiple lenders – Use aggregator sites like BankBazaar, PaisaBazaar, or contact banks directly.
- Negotiate – If you have a strong financial profile, ask for a better deal.
- Keep documentation ready – This speeds up approvals and may influence interest rate decisions.
- Go for shorter tenures if affordable – It reduces overall interest burden.
Documents Required for LAP
| For Salaried | For Self-Employed |
|---|---|
| PAN card, Aadhaar card | PAN card, Aadhaar card |
| Latest salary slips (3-6 months) | Business proof (GST, license, etc.) |
| Bank statements (last 6 months) | ITR & financials (2-3 years) |
| Property documents (title, NOC) | Property documents |
| Employment proof | Business continuity proof |
LAP vs Home Loan – What’s the Difference?
| Aspect | Loan Against Property | Home Loan |
|---|---|---|
| Purpose | Any purpose (business, personal) | Only for buying/building house |
| Interest Rate | Higher | Lower |
| LTV Ratio | 60–75% | 80–90% |
| Tenure | Up to 20 years | Up to 30 years |
Tax Implications of LAP
Unlike home loans, LAP doesn’t offer general tax benefits unless:
- Funds are used for business (interest is deductible under Section 37(1))
- Loan is used to purchase another property (Section 24(b) deduction may apply)
Always consult a tax advisor to structure your LAP smartly.
Conclusion: Is LAP Worth It in 2025?
A Loan Against Property is a smart, affordable funding solution if you own a property and require a large loan amount. Interest rates in 2025 remain competitive due to stable repo rates, making it an excellent time to explore LAP options.
However, choose your lender carefully by comparing interest rates, terms, and hidden charges. A slight variation in rate or fee structure can translate into lakhs over the loan tenure.
FAQs – Loan Against Property Interest Rates
Q1. Which bank has the lowest LAP interest rate in 2025?
SBI and HDFC currently offer among the lowest rates starting from 8.80%.
Q2. Can I prepay my LAP loan?
Yes, especially if it’s on floating rate, without any penalty. Fixed rate LAPs may have charges.
Q3. Can NRIs apply for LAP in India?
Yes, several banks like ICICI, Axis, and HDFC offer LAP to NRIs.
Q4. How much time does LAP processing take?
Usually between 7 to 15 working days depending on property and documentation.