Are you looking to start your dream business? 

Or are you in need of working capital to expand your current venture? 

Or do you want funds to give your daughter a lavish wedding? 

There are plenty of situations in life where we require cash. In such scenarios, did you know that you can use your immovable property to get a loan to meet all your financial requirements? Yes, your property has the potential to help you during a financial crisis.

Here, in this guide, we show you how to avail loans against your property – be it a constructed home or any other commercial property. 

What is a loan against property?

Loan against Property (LAP) is a type of secured loan that you can take advantage of during a financial crisis. As the name implies, this loan is offered against a property – like a home, apartment, commercial space, office, or even a land plot. Since it's a secured loan, the interest rates are significantly lower when compared to other loans like a personal loan.

Salient highlights of a Loan against Property:

  • There is no restriction on the usage of the loan amount. You can use it for any reason like a medical emergency, funding your child's higher education or wedding, business expansion, home renovation, etc.

  • Lower interest rates – Since the loan is offered by pledging property as collateral, it reduces the risk borne by the lender. Hence, the lender provides lowered interest rates. 

  • Zero to minimal repayment charges – If you wish to close the loan before the tenure, you can pre-close it without paying any penalties.  

  • Easy to avail – Since it's a secured loan, the risk is significantly reduced for the lender. Even if you fail to repay the loan in the worst case, the lender can recover the loan's cost by auctioning the pledged property. Hence, lenders are more willing to offer this type of loan.  

  • Long Tenure – Loan against property is available for a long tenure ranging up to 15 years. This is ideal if you’re looking to repay the loan over a longer tenure, with a small EMI. 

How to get a loan against property? 

Now, that we’ve seen the benefits and features of LAP, let’s take a look at how to avail the loan and the various steps involved: 

Step 1: Choosing the Lender 

The first question all borrowers have is, "where can I get a loan against property?”

All leading banks and several NBFCs offer loans against property to their customers. Make sure to check the interest rates, eligibility criteria, and other charges like processing fees, foreclosure charges to find the right lender.

Step 2: Property Evaluation 

Once you approach the lender, the lender’s team assesses the net market value of the property you’re pledging as collateral to avail the loan. The cost of the property plays a crucial role in determining the sanctioned loan amount. Generally, most lenders authorize loans up to 60% of the property's current value for residential properties and 50% of the property's value for commercial properties.

Step 3: Eligibility Criteria 

Once the lender has assessed the value of the property, they move on to the next step – evaluating the eligibility of the applicant. The eligibility criteria vary from lender to lender. Generally, most lenders check the credit history and credit score of the applicant to evaluate eligibility. 

Besides the credit score, lenders have other eligibility conditions like age of the applicant, income levels, etc. 

Step 4: Furnishing Documentation 

Once you meet the eligibility conditions, the lender requires you to submit the necessary documentation. The actual list of documents needed varies from one lender to another. Here are the general documents that you have to provide:

  • Salaried individuals – id proof, address proof, income proof (Form 16, bank passbook, etc.)
  • Self-employed professionals – id proof, address proof, income proof (IT returns, profit/loss statements, proof of the business, etc.)
  • Proof of ownership of the property – you also have to submit the documents related to the

Step 5: Loan Sanction 

Once the lender verifies the submitted documents, the loan is sanctioned. The disbursed loan amount is credited directly to the bank account of the borrower.

The repayment of the loan is in the form of fixed monthly EMIs. The EMI amount is decided during the loan application. The borrower can then repay via post-dated cheques or ECS (electronic clearing service), where the amount is automatically deducted from the borrower’s bank account every month. 

Loan against Property vs. Personal Loans 

Both personal loans and loans against property can help you meet your financial requirements. However, there are significant differences between both. Let's compare both to help you decide the right option. 

Take a Loan against Property, if: Take a Personal Loan, if:
You own a property that you can pledge as collateral. You don't own a property.
Lower interest rates

Easy availability

Longer tenure up to 15 years
Easy to avail

Readily available
If you fail to repay the loan as per schedule, you stand to lose your beloved property.
Higher interest rates

Short tenure – the maximum repayment period is 5 years.



A loan against property is an excellent way to meet all your emergency financial needs by using your property. You can easily avail this secured loan by mortgaging a residential property, commercial property, or a plot of land. With low interest rates, easy availability, and flexible repayment, this loan can meet all your financial needs.