When you offer a property you own (whether residential or commercial) as collateral to take a loan, it is known as a loan against property. It is a popular type of loan to take as it is cheaper than a personal loan and offers a larger loan amount over a longer repayment period. It is similar to a Personal loan in that you can use the loan amount for any purpose – like debt consolidation, business expansion, education expenses, family or medical emergency. 

Benefits Of Loan Against Property Compared To A Personal Loan

1. Lower interest rate: Personal Loans are among the most expensive consumer loans to take as they are unsecured by any collateral.  A loan against property is a secured loan and the rates are much lower. Generally, interest rates on a loan against property can range from 8-10% while interest rates on personal loans can range from 8.30% p.a. and 49% p.a. Of course, each lender has their own rates depending on your credit profile and other internal policy regulations.

2. you can get a loan for up to 60 % of the market value of the property which can translate into a sizable amount of funds. This is far larger than the amount you would get for a personal loan - and it comes at a cheaper cost.

3. Longer repayment period: Since it is a secured loan, lenders have a lower lending risk and are willing to grant a longer repayment schedule. The tenure for a loan against property can stretch up to 15 years while a personal loan has a tenure of only 1-5 years.

4. Lower EMIs: Because of the longer loan period, the monthly EMI is also smaller, meaning it is a lighter repayment burden over the entire tenure of the loan when compared to a similar-sized personal loan.

5. Tax benefits: Tax benefits can be availed on the interest amount for a loan against property under Section 31 of the Income Tax Act. Tax benefits up to a maximum of Rs. 2 Lakhs can be availed on income tax if the loan against property is taken to build a new house. For a personal loan, you cannot avail of tax benefits as it is not considered as part of your income.

6. Pre-Closure charges :There are no prepayment charges for closing a loan against property. This makes closing your loan against property easier and hassle-free. But, a personal loan has pre-closure charges.

Other Benefits Of Taking A Loan Against Property

a. Simpler documentation process – Since most of the paperwork is done at the time of buying the property, the documentation required for a loan against property is simple. All it requires is a clean title deed with no encumbrances.

b. Leverages an existing asset – Like a gold loan, a loan against property allows you to leverage an asset that you already own. The property could be residential (house, apartment or plot of land), commercial or industrial.

c. End-use flexibility – A Loan against Property gives you the freedom to spend the loan amount for any purpose you wish, much like a personal loan or a gold loan. Because of the larger loan size and the longer tenure, a loan against property is ideal for a substantial long-term expense.

d. Flexible Loan Amount - The loan amount you can get from a loan against property is based on the market price of the property. It could be up to Rs. 5 crores. It is an easy way to get a bigger amount for the property. 

e.Various Property Options And Optimal Usage Of Property -To procure a loan against property, you can use different types of properties like self-occupied house, residential property, commercial property, or a piece of land. This viability not only makes taking a loan simpler but also helps you use a property efficiently. Also, the borrower continues to own and use the property while obtaining funds against it. 

Approval Process Is Easy

Since security (collateral) is available, a loan against property is easy to get compared to other unsecured loans. The documentation requisites are also minimal with some financial institutions providing doorstep facilities also. 

High Eligibility

Variations in eligibility for loan against property exist between individuals and businesses. However, the parameters used for both are easy to meet, such as minimum age and income, credit history, financial stability, etc. 

Continuous Ownership

In loan against property, the borrower continues to hold the ownership of the property. So, if the borrower is unable to repay the amount for any reason, they have the choice to sell the property and pay off the loan.


Loan against property in India is an easy option to finance life goals for both individuals and businesses. It is viable to get these loans, and they come with flexible loan amounts, easier interest rates, lower EMIs, high eligibility, and longer repayment durations. The financial burden on the borrower is lower, and it allows the borrower to utilize his constructively. 

FAQS of Benefits of Loan Against Property

1)How do you repay a loan against property?

Make payments more frequently on your loan. In that case, you will be able to repay the loan within 10 years. Use an EMI calculator for loan against property to select a duration so that your EMIs are affordable

2) How much loan amount can I procure on loan against property?

The maximum amount that can be procured on loan against property is an advance of Rs. 5 crores. The maximum amount for a salaried individual is Rs. 5 crores.

3) How much home loan can I get on property value?

The LTV ratio for home loans can go up to 90% of the property value for Rs. 30 Lakhs and below. This is according to the guidelines set by the Reserve Bank of India (RBI).  

4) Can I get a loan against property without income proof?

In the absence of income proof, peer to peer lending is possible. Ensure that you compare lenders and arrive at the best deal on a loan against property. Keep all the necessary documents ready for a smooth application process.