Tips to Avail of the Best Loan Against Property Interest Rates

A loan against property is a type of loan offered against an immovable asset, such as a residential or commercial property. These loans not only provide the benefit of long-term repayment options but also have lower interest rates than other types of loans. Property loans are preferred when large funds are required for business or personal expenses. Loans against property interest rates in India are competitive. 

Property Loan Interest Rates In India

The current loan against property interest rates in India range from 8.20% p.a. to 14.50% p.a. and the loan repayment tenor can go up to 20 years. Some banks may charge a higher interest rate depending on various factors, such as age, income, CIBIL Score, and loan tenor. 

If you have been planning to opt for a loan against property, here are a few tips on how you can get the best loan against property interest rates in India.

Tips to Avail of Best Loan Against Property Interest Rates in India

  • Research and Compare Deals – Just like before buying a certain thing, we compare the costs offered by different vendors, we must do proper research and compare the offers made by various lenders before choosing to go with one particular lender.  You can go online, research, and talk to banks and NBFCs to get details of the interest rates offered by each. After proper comparison, you can select the lender offering the best property loan interest rates.
  • Opt For a Lower Loan amount – Many banks fix loans against property interest rates in India based on the loan amount. A higher loan amount will attract higher interest on the loan. So, a loan against property amounting to INR 30 lakh will have a lower interest rate than a loan worth INR 1 Crore. 
  • Make Sure You Have a Good Credit Score – The CIBIL Score or the credit score of the borrower not only plays an important role in deciding the loan eligibility for a loan against property but also helps in determining the interest rate for it. A credit score of 750 to 900 is considered a high score and gives confidence to the lender about the loan repayment ability of the borrower. A low credit score flags the borrower as a high-risk applicant and as a result, the lenders charge a high property loan interest rate from individuals with a low credit score. So, maintain a good CIBIL score for a property loan and get lower interest rates.
  • Property to be Mortgaged – Loan against property interest rates in India are also influenced by the profile of the property. Some lenders offer lower interest rates for self-occupied residential properties as compared to interest rates for commercial properties. The property’s location, age, value, surroundings, overall condition, and its market value also decide the interest rate. Old and worn-out properties will have a higher interest rate compared to new buildings in excellent condition and prime locations. So, property to be used as collateral should be chosen carefully to avail of lower interest rates.
  • Profile of the Applicant – The applicant’s, age, occupation, monthly income, etc., also impact the interest rate of property loans. An applicant who is just a few years away from their retirement will be charged higher interest rates for a shorter tenor than a person who is in their mid-career. Thus, it is best to apply for a loan against property at a younger age for the best interest rates. Also, women applicants may get additional discounts on interest rates which may be a big plus while applying for a property loan.
  • Income and Employment – Lenders also take into account the borrower’s income, type of employment, and the profile of the employer while setting interest rates. Lenders often offer lower interest rates to salaried applicants due to their higher job/income stability. Applicants who are self-employed with irregular income flows or unstable job profiles or who have just started their professional journey are charged higher interest rates for loans against property.
  • Loan Tenor – The tenor of a property loan also affects the interest rates on it. A shorter tenor loan will have lower interest rates as the risk for the bank/lender is lower. For longer loan tenors, the risk is higher as the possibility of the borrower defaulting is greater. So, the banks may raise the property loan interest rate to compensate for this.
  • Relationship with the Lender – Borrowing from a known lender sometimes helps in getting attractive interest rates on loans against property. Borrowers who have a long history and an impeccable payment record of repayment with a lender may be offered lower rates of interest than other individuals. New borrowers also have to go through a credit appraisal process, unlike old borrowers with a long-standing relationship with the bank who can get better deals.

Summing Up

So, follow the above tips to get the best loan against property interest rates in India. A low interest rate can make your monthly property loan EMI more affordable and help to repay the loan easily.