Mortgage Loan Overview

Loan Against Property (LAP) are secured loans offered by different banks and financial companies. One can get these loan against residential property and loan against commercial property. In a mortgage loan, the property or asset is mortgaged to get a loan. These loans are the best option when compared to the personal loans. Because, they comes at lowest interest rate.

Mortgage Loan Interest Rate

Mortgage loan Banks Interest Rates Processing Fee
Axis Bank Mortgage Loan Hyderabad Axis Bank Mortgage Loan 11.35% 0.50% Min Rs. 5,000 - Max Rs. 10,000
Kotak Mahindra Bank Mortgage Loan Kotak Mahindra Bank Mortgage Loan 9.60% 1.00%
HDFC Bank Mortgage Loan HDFC Bank Mortgage Loan 9.75% 0.25%
Muthoot Finance Mortgage Loan Muthoot Finance Mortgage Loan 12.00% Upto 2.5%
Bank Of Baroda Mortgage Loan Bank Of Baroda Mortgage Loan 11% 1%
Canara Bank Mortgage Loan Canara Bank Mortgage Loan 11.70% 1.00% Min Rs. 5,000 - Max Rs. 50,000
Central Bank of India Mortgage Loan Central Bank of India Mortgage Loan 11.10% 0.50% Max Rs. 20,000
Corporation Bank Mortgage Loan Corporation Bank Mortgage Loan 11.40% 1.00%
ICICI Bank Mortgage Loan ICICI Bank Mortgage Loan 11.95% 0.50% Min Rs. 5,000 - Max Rs. 10,000
IDBI Bank Mortgage Loan IDBI Bank Mortgage Loan 10.20% 1.00%
Indian Bank Mortgage Loan Indian Bank Mortgage Loan 12.10% 1.17%
Union Bank Of India Mortgage Loan Union Bank Of India Mortgage Loan 11.60% 0.50%
Oriental Bank of Commerce Mortgage Loan Oriental Bank of Commerce Mortgage Loan 10.90% 0.50%
Punjab National Bank Mortgage Loan Punjab National Bank Mortgage Loan 10.20% 0.90% Max Rs. 45,000
State Bank of India Mortgage Loan State Bank of India Mortgage Loan 10.30% 1.00% Max Rs. 50,000
Bank of India Mortgage Loan Bank of India Mortgage Loan 10.65% 1.00% Min Rs. 5,000 - Max Rs. 50,000
United Bank of India Mortgage Loan United Bank of India Mortgage Loan 10.75% 1.00%
Syndicate Bank Mortgage Loan Syndicate Bank Mortgage Loan 11.65% 0.50% Min Rs. 500
Dena Bank Mortgage Loan Dena Bank Mortgage Loan 10.45% 1.00%

Mortgage Loan Eligibility Criteria

For Salaried Employee

  • The applicant should be a permanent employer in government or a private organization.

  • Age should be between 24 to 65 years.

For Professional,

  • The applicant should be a professional in any field such as doctor, architect, engineer, charted accountant etc.

  • Maximum age of an applicant is 65 years old.

For Self Employed Individuals,

  • The applicant should be a regularly filling IT returns.

  • The applicant should be in the business for 3 to 5 years.

Property eligibility

  • The property should be registered in the name of the applicant.

  • He/She should maintain a good CIBIL scores.

One can apply Mortgage loan for the following purposes

  • For medical treatments

  • For your children marriage

  • For your children higher studies

  • Expanding the business

  • For your dream vacation

Top Lenders who Offer Loan Against Property

1. Edelweiss

2. TATA Housing

3. HDFC Bank

4. Axis Bank

5. YES Bank

6. LIC HFL

7. Larsen & Turbo

8. IIFL

9. DHFL

10. Kotak Mahindra

11. IDBI Bank

12. HSBC

13. State Bank of India

14. ICICI Bank

15. Central Bank of India

Interest Rates for Mortgage Loans

If you are taking a mortgage loan, you can choose 2 types of interest rates. These rates of interest varies according to the loan duration.

Fixed Interest Rate: The rate of interest is remains fixed throughout the loan and vary from bank to bank.

Adjustable Rate: It is varies according to the market conditions. This will be beneficial for the people who take loan for a short period.

Types of Mortgage Loans

Regular Loan Against Property: This a most common loan that can be taken for the purpose of business expansion, marriage or medical emergencies, acquiring assets. Lower interest of loan against property is 8.80%. Most of the banks and NDFCs are giving loans for loan against residential properties. Only few banks offers loans against commercial property. Financial organizations are open to extend the loan against residential property. Very few banks offer loan against industrial property.

Loan Against Property Overdraft: This loan is valid for those whose income is fluctuating during the year. It allows you to pay the loan at any period with low interest rates. This loan is highly recommended for the self employed individual or businessmen.

Loan Against Property Top Up: This is a additional loan amount that can be added to your existing loan amount. Top up loan can be available from your existing bank or can be availed at the time of transferring the loan to other bank. The LTV cap on mortgage loan is applied to calculate your loan amount eligibility. This means your existing loan and top up loan outstanding should be less than or equal to 70% of the property's market value. Top up amount eligibility is varies from bank to bank which is based on your property value and income.

Personal Loan v/s Mortgage Loan

There are many difference between personal loan and mortgage loan:

  • No guarantor is required for personal loan. For mortgage loan, the applicant need to provide his property as a guarantor.

  • Loan against property has low interest rate when compared to a personal loan. The interest for mortgage loan is 10% to 16% and the interest rate of personal loan is 11% to 12%.

  • The EMIs are higher for personal loan and cheaper for mortgage loans.

  • Personal loan is unsecured loan and a mortgage loan is a secured loan because a security is given.

  • Loan tenure for mortgage loan is up to 15 years and for personal loan, it is up to 5 years.

  • In a loan against property, the loan amount will be based on the market value of a property. In a personal loan, it depends on the applicant's income.

Home Loan v/s Loan Agianst Property

  • Home loan can be taken for home construction or home renovtion or buying a home. However loan against property can taken for business or personal.

  • Home loans offers chep interest rates and loan against property interest rates are the second cheapest interest rate.

  • Loan tenure for home loans are longer than loan against property's loan tenure.

Mortgage Loan EMI Calculator

There are 2 ways to calculate the EMIs for loan against property

1. By using below formula

Equated Monthly Installment (EMI) = [P x R (1+R) N]/ [(1+R) N-1]

P represents the principal loan amount

R represents the rate of interest

N represents the tenure of a loan

2. By using LoanOnMind's EMI calculator

To calculate the monthly EMI, use our EMI calculator. Enter the values of loan amount, loan tenure and interest rate to calculate the EMI easily.

Features of Mortgage Loan

For loan against property loan, many banks and financial institutions are offering high loan amount at attractive interest rates.

Quick and hassle fee loan process.

Commercial and residential properties are accepted to get a loan against property loan.

Higher LTV, flexible repayment options, and long loan tenures.

How to Get The Best Loan Against Property

It is easy to get a loan against property by comparing the loan interest rates, foreclosure charges, processing fee and other terms and conditions of all banks. Follow these steps to get a hassle free and transparent mortgage loan.

Step 1: Check the Eligibility of Loan and EMI

If you are planning to take a loan, you have to estimate your loan eligibility to know how much amount you are eligible to get a loan. Based on your current income, calculate the EMI that you are eligible to pay. The loan eligibility is calculated based on the age, existing obligations, annual income, LTV ratios, property type and other factors. EMI can be calculated on the interest rate, loan amount and loan tenure.

Step 2: Check the Legal Documents and Property Approval Status

The applicants should have all the government approval documents and other set of documents. Some of the property documents required for a lender are: Lease ded/ Registered sale deed/ Conveyance, Latest home tax receipt/ return, Approved building plan for Municipal Corporation, Past sales deeds chain etc. residential properties can get loans easily at lowest interest rates.

Step 3: Decides on mortgage loan type and it's rate of interest

If you are eligible to get a loan, you need to check the mortgage loans offered by different companies. The aspects of rate of interest that you need to check are:

Fixed and Floating Rates: Fixed rates are higher than the floating rates and the interest rates are remains same during the tenure of a loan. Many of the people are choosing floating rates. Because it allows interest rates to be moved with accordance to the current rate of interest.

It also offers overdraft facility. You can deposit amount in your overdraft mortgage loan account when available and reduce your loan interest rate and also shorten your loan tenure. This loan is highly recommended for self employed individuals. The overdraft loan's interest rates are higher than the regular interest rates.

Step 4: Compare the charges and other parameters of different banks

The banks charges additional fees and charges on mortgage loans. One should know the additional fees and charges with a mortgage loan which includes processing fee, prepayment charges, insurance and other charges of different banks.

Step 5: Choose the Bank based on other service related parameters

If you are planning to take a loan against property, you should consider other service related parameters offered by the banks which are door step service, quick loan delivery, loan process. Read the reviews about the banks and make a good decision.

Factor to Consider before going to take a loan against property

If your CIBIL score is below 620, then there is a less chance of getting a loan. So, you should increase your CIBIL score to get a secured loan against property. If you pay off your exsting loans, then your CIBIL score will be increased.

If a bank gives more loan against property, then go for that bank. The loan sanctioned ratio to the market value of your property is called loan to value ratio (LTV).

The higher LTV ratio has higher better offer. The LTV ratio is different for various properties. Here are rough estimations:

  • For self properties: 75%

  • For commercial properties: 60%

  • For rented or empty properties:60%

  • Industrial land for commercial purpose: 60%

  • Industrial use of an Industrial property: up to 55%

Compare the interest rates from various banks. The rate of interest range between 10 to 14%.

Choose the best repayment option. The other charges such as prepayment, processing fee, foreclosure charges are less. High charges are difficult for the loan borrower to pay off the loan. And also there are many modes of EMI options are available to pay off the loan amount those are ECS (Electronic Clearance System) or PDC (Post Dated Cheque). Choose the best one that suited for you.

FAQs about Loan Against Property

1. What is the maximum amount that I get for my property?

You can get loan up to 70% of the market value of the residential property and up to 60% of the value of the industrial property. Terms and Conditions apply.

2. For What purpose can I avail a mortgage loan?

You can avail a loan for any business or residential purposes.

3. How can I repay my loan?

The loan repayment can done through EMI. It can be paid through Post Dated Cheques(PDC) and Electronic Clearance System(ECS).

4. How will my loan eligibility is calculated?

It is calculated by the loan repayment capacity of the borrower.

5. What is the maximum loan tenure of a loan against property?

Maximum loan tenure is 15 years.

6. Can repay my loan at any time?

Yes, you can repay your loan at any time.

7. What are charges for Mortgage Loan?

Processing Fee: If you are applying for a mortgage loan, the processing fee can be charged. The processing fee is ranging from 0.50 to 1% of the loan amount.

Foreclosure fee: This fee can be charged when you pay off the loan amount before loan tenure completion.

Other Charges: Bank charges other charges at the time of mortgage loan processing.

8. Does CIBIL Score is important for mortgage loan?

CIBIL score is one of the important factor to consider while applying for any loan. A good CIBIL score represents the good repayment capacity of an applicant. Banks offer high loan amount at low interest rate when you having a good CIBIL score. A good CIBIL score can affect your credit score. Bad CIBIL score can be a change of loan rejection. So, it is advisable to repay the amount at a time and get a good CIBIL score.

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