Loan Against Property Interest Rates: Factors That Affect Your Borrowing Cost

Loan against property is a popular multipurpose loan category that can be easily availed from top-rated financial institutions. If you have any residential or commercial property, you can take a loan on 50-70% of its market value and use it for any emergency or urgent expense. 

The use of this secured loan amount is not restricted; hence, you can use it for medical expenses, business expansion, children’s education, or even for investments. The best feature is that you are still the owner of your property, which has been used as collateral, and you can use the property as you like.

About LAP Interest Rates

Loan Against Property (LAP), being a secured loan type, is available at a lower rate of interest, as compared to unsecured ones. You can choose from fixed or floating interest rates and use the EMI Calculator to assess the right loan amount and loan tenure according to your monthly budget. A floating rate of interest depends on the market rates, while a fixed rate of interest is offered to you when you apply for it. It stays the same throughout the loan tenure.

However, the fixed rate of interest doesn’t remain the same for all applicants. It varies from person to person and is influenced by various factors. Here we will discuss the key factors that impact LAP interest rates.

7 Factors that Impact the Interest Rates of Loans Against Property

Let us look into the substantial elements that affect the LAP interest rates:

Your Age

If you have recently started earning or nearing your retirement age, the interest rate could be on the higher side. There are several options available for a loan against property for senior citizens, but these are available at a higher rate of interest.

Income and Employment/Business Stability

Suppose you have a good monthly income, multiple sources of earnings, and stable employment or business. In that case, you get the advantage of paying a lower interest rate than an individual who doesn’t have these. A stable income depicts your strong repayment capacity, which makes you a much lesser risky applicant.

Credit Score

If your credit score ranges between 700 – 900, you get to pay a lower interest amount on your property loan than someone with a credit score lower than 700. Your credit score is influenced by how you handle your existing debt, debt-to-income ratio, repayment capacity, and financial status.

Your Relationship with the LAP loan provider

If you have been financially dealing with the LAP provider for quite a few years, and they have trust in your way of working and repayment capacity, the chances are that you may get a lower interest rate on your LAP if applied from them. 

Property Location and Type of Property

A property located in a posh area, with all basic amenities like schools, hospitals, markets, cinema halls, etc., nearby, the resale value of such properties is always high. Thus, the interest rate for a LAP of these properties is low. If the location and condition of the property are below average, it is a sign of low resale value, which means, that the interest rate could be higher.

Loan Amount and Loan Tenure

The higher the loan amount and tenure, the higher will be your interest rate, and vice versa. You can use a LAP EMI calculator to ascertain the right amount of loan amount and tenure based on the calculated EMI, which would fit your monthly budget.

Macro-Economic Factors

Government regulations, inflation rate, market banking rates, economic growth rate, and RBI’s monetary policies influence the loan rates across the nation. So, your LAP interest rate may vary, considering such macroeconomic conditions.


Now that you are aware of the core elements that influence LAP interest rates, it would be wise to work on them so that you can be offered a good deal. Make sure you keep the above-mentioned tips in mind when applying for a loan against property, as taking care of your financial circumstances can grab you the best interest rate on property loans in the long run.

Read also: Check Out Home Loan Eligibility Based On Your Salary In 2023

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