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All About the Current Interest Rate Of Loan Against Property

All About the Current Interest Rate Of Loan Against Property

A loan against property is one of the most viable options that one can opt for at a time of financial crisis. Being a secured loan, the legally owned property of the borrower is kept as collateral, and the loan amount is disbursed at a certain percentage of the value of this pledged property.

The property loan rates are quite economical as collateral is involved. However, before deciding to opt for this loan, prospective applicants must be aware of the current interest rates of LAP to make an informed decision.

About current property loan rates

In the case of a loan against property, the loan amount to be disbursed depends upon the property’s current value. Similarly, its interest rates also depend upon a number of factors. An essential factor that affects the interest rates of property loans along with all other types of loans is the repo rate decided by the RBI.

At present, the Reserve Bank of India has raised the repo rate by 50 basis points. That is to say, as per the 30th September 2022 update, the repo rate stands at 5.90%. Due to this increased repo rate, the property loan interest rates are also likely to be increased.

However, there are other factors as well that help decides the interest rates of LAP.

Other factors that determine the property loan interest rate

Often lenders do not offer the same interest rates to all property loan borrowers. It varies depending upon several key factors like:

  • Credit score

CIBIL, or credit score, is one of the primary factors that affect property loan rates. If the applicant’s CIBIL score is 750 or more, there is a high chance that the lender will offer the property loan at a lower interest rate.

Read Also: Tips to Improve CIBIL Score

  • The profile of the applicants

The applicant’s profile is often considered one of the most important factors affecting the LAP interest rates. In fact, there are different types of loan against property rates for different applicants, be it salaried, self-employed, doctors, chartered accountants, etc.

Apart from income and profession, there are other factors of the applicants as well that impacts the property loan interest rates, like their age, number of working years left, etc.

  • Property kept as collateral

The type of property, whether residential or commercial, also greatly impacts the property loan rates. Residential properties are considered more valuable and thus fetch lower interest rates than commercial ones.

Similarly, the location of the property also matters. If the property is located in an urban area with basic civic amenities, then it will have a higher resale value and attract a lower interest rate than that located in a rural area.

These are some of the popular factors that the applicant should consider before availing of a loan against property.

Many NBFCs and financial lenders provide pre-approved offers for various financial loan products like home loans and others. These offers help to simplify the loan application process. Borrowers can check their pre-approved offers from the lender’s website by providing their personal credentials like their names and contact numbers.

To know more about the current interest rates of loans against property, one should do proper research on financial lenders and then refer to one that offers the lowest property loan interest rates.

The applicants can even calculate their payable EMI using the loan against property EMI calculator. This will help them in comparing the multiple loan options from various lenders and make a suitable decision as per their affordability and budget.