Home Loan

All the Important Factors you Wanted to Know About Loan Against Property


When we need money quickly, the first thing that comes to mind is getting a loan. We can get money immediately or meet our needs by getting a loan from a lender. But because there are so many loans, choosing the best one for our needs can take time and effort.

Loans for things like homes, cars, businesses, etc., are meant to help you pay for those things, but they can’t help you in an emergency or if you have a pressing financial need. In these situations, you can apply for a loan that can be used for more than one thing, like a personal loan or a loan backed by your home. A loan against property is secured, while a loan for personal use is not. In this post, we’ll discuss the pros of taking out a loan against property and whether it’s a good idea. First, let’s talk about what a “loan against property” is.

What is Loan Secured by the Property?

A loan against property is a secured loan. The lender gives you the money after keeping your property as collateral or security. This could be land, a rented home, or a business location.

It’s important to point out that the borrower is still the legal owner of the property on which a mortgage loan is owed. It will only be used as collateral until the full loan amount is paid back.

There are no rules about the usage of a loan against property. It is a great alternative to unsecured personal loans. You can use this for anything, like a medical emergency, higher college costs, or home improvements.

Should you Decide on a Loan Secured by Property?

When you apply for a loan against property, you have two options. You can choose between a personal loan or a loan secured by the property. Even though both have pros and cons, the second option may be better if you need a large amount of money.

Benefits of Loan against Property

No Ownership Transfer

Even though you must put up an asset you own to get a LAP, the mortgaged asset does not change hands. Legally, your property is still yours, and the lender would only use it as security while you pay back your loan against the property.

Low interest

This is a clear benefit that puts LAP ahead of other choices. The interest rates on LAPs are lower than on personal and unsecured loans. Your EMIs may decrease because interest rates are decreasing, making your finances easier. Most LAP interest rates range from 8% to 15% per year and go down yearly.

No limitations on usage

Since LAPs are multipurpose loans, there are no limitations on how To use them. You can use a loan against property to fix up your house, pay for your child’s college, pay for a family trip, take care of an emergency medical situation, or even buy things online.

Repay in a reasonable timeframe

LAP lets you borrow a lot of money to repay your loan over time. LAPs usually last between 15 and 20 years, but it depends on the lender. You can choose how long your loan will last based on what you need and how much money you can pay back.

Simple qualifying requirements and documentation

LAPs often have basic requirements for who can get them and what they need to prove. Because they are secured loans, lenders don’t have to take on many risks when they give them out. On the other hand, personal and unsecured loans have strict requirements for who can get them and long verification processes.

Factors to Take into Account When Applying for LAP

Let’s discuss the things you must bear in mind when applying for it:

The ratio of loan to value

The loan-to-value ratio of your LAP will determine how much money you can borrow from a lender. It is also the ratio between the most you can borrow and the property value you want to use as collateral.

Term of Loan and EMIs

When choosing the length of a LAP loan, you need to be careful. If you choose a short term, your EMIs will go up, and you may need help to make payments on time every month. On the other hand, if you choose a longer term, you might have to pay a lot of interest. So, try to find a good balance between the length of the loan and the EMIs.

Tax advantages for LAP

Using a LAP to purchase or construct your home may be eligible for a tax reduction of up to Rs. 2 lakhs within Section 24 of the Income Tax Act of 1961. It may claim certain tax breaks against the interest portion of your LAP.

Interest Rate

Before requesting a loan against property, you should evaluate the LAP interest rates provided by different lenders. NBFCs typically provide cheaper interest rates than banking institutions.


LAPs are different from unsecured loans because of these points. You can easily meet all of your financial needs with the help of a loan backed by property. So, it’s important to keep the LAP in mind when deciding. The lender could take your property if you don’t pay back your loan. Because of this, you should only get a loan backed by property if you are sure you can pay it back on time. If you want, a personal loan is a risk-free way to get money. You can visit the Piramal Finance website and explore their products and services.