What percentage of loan can I get against property?

Recently, someone asked me how much percentage loan against property. After researching a bit, I came to know that when a lender says up to 70%, it means the maximum loan amount will not exceed 70% of what they estimate your property is worth (after valuation). However, it depends on several factors.

What is the Percentage of Loan Against Property?

If your property is worth Rs 1 crore, for example, you may get a maximum loan of about Rs 70 lakh, subject to other eligibility criteria. This 70% LTV (loan-to-value) threshold is a common ceiling with banks/NBFCs for LAP.

However, getting the full 70% depends on many factors. Here's what lenders typically consider:

• Condition & type of property (residential, commercial; whether it is well-maintained).

• Location of property matters in prime or well-developed areas, and valuation tends to be more favorable.

• Outstanding loans or encumbrances on the property. If your property has existing mortgages or legal issues, the admissible loan amount may be lower.

• Your credit profile (CIBIL / credit score), income stability, and loan repayment history. If you are lower on these, the lender may approve less margin (say 50-60% rather than 70%).

• Loan tenure and interest rate: longer tenure or higher risk may reduce the percentage offered.

• If your property is valued at Rs 50 lakh, you might be eligible for a LAP of up to Rs 35 lakh (70%).

• If your property is in a slightly less prime area, you might be offered only 60% or 55%, i.e., Rs 30 lakh.

This is all about how much loan against property can I get.

A loan against property, or LAP, is a credit you can obtain by mortgaging your property with the lender. The property is generally used by Indian banks as a security deposit in the event that a loan applicant defaults on the loan amount. Therefore, if you default on the loan, the lender has the right to sell the property and reclaim the money. But first, you must know in detail what is a loan against property percentage.

How much loan you can get against your property?

You should be aware that LAP lenders only offer a specific portion of the property's market value. It is one of the key facts regarding the programme. 50% to 60% of the property is often financed by banks. Other private lenders provide around 80% of the value of the property. LAP qualifies as a secured loan because you maintain collateral with the lender. This guides you about what percentage of loan can I get against property.

What are the benefits of a loan against property?

• Most lenders are willing to provide these loans because of the fact that LAP is a secured loan. You can simply obtain credit from all of India's main banks.

• In most cases, LAP is offered for up to 15 years or longer. 

• You can close the loan early provided your financial situation is good. 

• Prepayment fees are not imposed by the banks. It also allows you more than enough time to repay the loan because of the length of the tenure.

• Even if you give up ownership of your property to obtain the loan, you still retain ownership of it. You will receive your property back upon completion of the final instalment.

• The interest rate for LAP is typically lower than that of a personal loan because the loans are secured by real estate. 

• Although the interest rate differs depending on the lender, it often ranges from 12 to 15%. It is significantly less than the interest rate on personal loans, which can be between 15% and 25%.

You are now aware of the loan against property percentage.