Home Loan

Understanding Loan Against Property Interest Rates and Charges


Loans against property require borrowers to sell their real estate, whether residential or commercial, as security for the Loan. Using a loan against property (LAP) involves small fees and minimal loan processing and verification costs.  

These fees are often little when considered against the benefits of a loan against property. Both lenders and borrowers make the procedure simple and convenient. One can save most of their time by fully understanding the Loan against property, including the interest rates and fees. 

A loan against property is becoming a popular credit instrument due to its ease of use and potential as a source of funding. But, to plan and manage the finances, one must also understand the charges. In this situation, land and property can act as important assets and collateral for loans. Since this loan is secured, it has a lower interest rate and a higher chance of approval. Mortgage loans are also referred to as LAP schemes. 

Compared to the benefit of a loan against property, these charges are commonly negligible. They make the process easy for lenders and borrowers. People can save most of their time by being informed of the loan terms against property, including Loan against property interest rates and charges.

The loan against property interest rate depends on several factors. Factors such as the length of the loan, credit score, the type of property, and application profile. But what are the interest rates for loans secured by real estate? How would one check their loan? Read the complete article below for a brief response to all the questions.

Types of Interest Rates

  • Fixed Interest Rate: A loan against residential or commercial property has a defined or fixed interest rate that must be repaid in addition to the principal loan amount. The calculation is exact as the monthly instalment amount stays the same over the repayment period. The Loan Against Property Interest Rate remains constant throughout the period.
  • Floating Interest Rate: In Floating Interest Rate, market factors affect the Loan Against Property Interest Rates, which vary from time to time. The monthly instalment amount changes in pair with changes in the interest rate. The lender uses a base rate or index rate established by the Reserve Bank of India to compute the interest rate. As a result, the floating rate increases when the base rate does, and vice versa.

Charges Associated with Property Loan

  • Processing fees: Your lender may assess one-time loan processing fees whenever you apply for a loan confirmed by real estate. Lenders charge this fee to cover carrying costs, managerial expenses, the cost of accessing your property’s value, and other costs. This charge is 0.5% to 2% of your loan amount plus Goods and Service tax.
  • Legal Charges: The lender confirms all paperwork about the property before approving a loan against it. They also evaluate the risk inherent in the applicant’s profile with legal papers and validate the property by sending an executive to the property site. The cost of legal fees might range from Rs. 5,000 to Rs. 10,000.
  • Foreclosure Charge: Lenders charge a foreclosure fee if a borrower pays off his Loan before the repayment period has run out. The charges could range from 1% to 4% of your spending.
  • Part-Prepayment Charge: To avoid foreclosure charges, the loan must be repaid in one payment before the tenure expires. But, just like prepayment, loan foreclosure carries a fee. It ensures the loan has a low foreclosure charge to make repayment cheaper. Each lender has a different policy; some may not even charge for it.
  • Penalty Charges: For any reason, if a borrower doesn’t pay back their monthly EMI, the lender may charge them a fee. You will be required to pay penalty interest if you miss a monthly instalment payment or default on the loan. This is evaluated in addition to the interest rate and is computed monthly. So, to avoid paying such fees, it is best to plan for repayment in advance.
  • EMI Bouncing Charges: No one likes to find themselves in a situation where their signed check bounces because of insufficient funds, known as an EMI bouncing charge. However, as a borrower, your lender may request a bouncing fee if the same thing occurs to you while making your loan against property EMI payment.
  • Loan Rescheduling Charges: Loan rescheduling refers to extending the current loan term. Your monthly instalment amount changes, as a result, enabling you to pay less each month. But doing so will result in a rescheduling fee set by a lender. Again, this may differ from one lender to another.

Use the EMI calculator tool to see how much money is needed to set aside each month. It informs us about the various Loan Against Property Interest Rates and lets people evaluate them effectively. The EMI calculator considers the loan amount requested, the applicable interest rate, the processing fee, and the term.


You must be aware of the Loan Against Property Interest Rates and fees to plan and manage your budget successfully. To effectively plan and manage your finances, you must know Loan Against Property Interest Rates and their associated charges. You can visit the Primal Finance website to get a complete solution to your financial doubts, create a budget for repayment and see how much the loan will cost.