A Comprehensive Guide to Loan Against Property

A Comprehensive Guide to Loan Against Property

There are times when your existing savings may not be enough to help you deal with an emergency or an unplanned financial need. A loan against property is the best suited financial instrument for such situations. You can get funds sooner than you expect and spend it in whichever way you like.

This article contains every information you need to successfully apply for a loan against property or land propertyand get funds for all your needs.

What is a Loan Against Land Property?

A loan against land property uses your property as collateral. You can pledge a residential or commercial property. The lender uses your asset as security and reserves the right to sell the asset if you default. However, you can stay assured that the lender will give you several chances to repay and send letters as a reminder before liquidating the asset. The best thing about a loan against land property is that you can continue to live in the property that you mortgage.

How Can You Use the Loan Amount?

There is no limitation on the end-use of a loan against land property amount. Borrowers generally use the funds for one or more of the following purposes:

  • Purchase a house
  • Construct a house
  • Renovate or improve a home
  • Consolidate business debt
  • Buy a motor vehicle
  • Sponsor an event, such as a family party or a wedding
  • Pay hospital bills

You can also use the funds to spend on anything other than the ones listed above. However, you should ideally not use it to bet, gamble, or engage in speculative activities. 

What is the Eligibility and Maximum Loan Amount of a Loan Against Land Property?

The maximum loan amount of a loan against land property is usually up to 60% of the property value. However, the loan amount depends on your eligibility. Loan against property eligibility includes your credit score, income, nature of income, age, property condition and location. Regarding credit score, you should aspire to keep it higher than 750 to get the maximum loan amount. Additionally, your age must be between 21 and 65. Lenders also evaluate the property before determining its worth and the loan amount. 

What Documents Do You Need to Submit to Avail a Loan Against Land Property?

The documents required for a loan against land propertydepends on the lender. Most often, lenders ask you to submit the proof of income, age and address related documents, property papers, bank account statement, and processing fee cheque. Some lenders like PNB Housing provide doorstep service, and you can apply for a loan against land propertywithout going anywhere. 

What is the Interest Rate of a Loan Against Land Property?

Like all other loans, the interest rate of a loan against land propertyis linked to the policy rates set by the Reserve Bank of India (RBI). The rates increase when the RBI raises the policy rates and vice versa. Similar to the loan amount, loan against propertyinterest rates also depend on your eligibility. For example, you can expect to receive the best rates when your credit score is above 750.

What is the Repayment Term of a Loan Against Land Property?

The repayment term depends on your age. Usually, the maximum term offered by lenders is twenty years. However, if you are closer to the maximum age, which is 65, the loan term will reduce proportionately. Also, choosing a shorter term may increase interest rates and vice versa.


Loan against land property approval depends on the lender. As a borrower, you need to carefully evaluate the terms laid down by the lender before applying for the loan. Double check the interest rates and the loan conditions to get a no-frills loan against land property.

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