A Loan Against Property (LAP) can be useful when a borrower needs a larger amount of funds and has an eligible residential or commercial property to offer as security. Since the loan amount can be substantial and the repayment period can extend over several years, choosing the right lender requires more than simply looking at the interest rate.
Factors such as the maximum loan amount, loan-to-value (LTV) ratio, repayment tenure, processing fees, prepayment terms and available loan facilities can have a significant impact on the overall borrowing cost.
The following list compares the current LAP offerings of six major banks in India based on information published by the respective lenders.
1. Federal Bank
- Interest rate: Starting at 8.20% p.a.
- Maximum loan: ₹20 crore
- Maximum tenure: 15 years
- LTV: Depends on property and borrower profile
- Facility: Term Loan + Overdraft
- Balance transfer: Available
- Property types: Residential, plot and commercial
- Prepayment/foreclosure: Nil charges on floating-rate individual loans
- Processing fee: Up to 1% + GST, as per profile
Federal Bank's Property Power Loan combines a competitive starting interest rate with a maximum loan amount of up to ₹20 crore. This makes the product relevant for borrowers looking for a higher-value loan against eligible property.
The availability of both term loan and overdraft facilities provides flexibility depending on the borrower's funding requirement. The final interest rate and loan amount, however, depend on factors such as borrower profile, property and applicable eligibility conditions.
2. HDFC Bank
- Interest rate: Starting at 8.55% p.a.
- LTV: Up to 65%
- Maximum tenure: 15 years
- Loan against rental income: Up to 50% of property value
- Processing time: Around 7 days in standard cases
- Extended processing: Up to 25 days in valuation or field cases
- Overdraft: Available
- Property types: Residential, commercial and special properties
- Processing fee: Up to 1.5% + GST, depending on the case
HDFC Bank offers Loan Against Property for eligible borrowers against different types of properties. The maximum tenure is 15 years and the LTV can go up to 65%, subject to applicable conditions.
The bank also provides an overdraft facility. For standard cases, the processing timeline can be around seven days, while applications requiring additional field investigation or property valuation may take longer.
3. IDFC FIRST Bank
- Interest rate: Starting at 8.75% p.a.
- Maximum loan: ₹15 crore
- Maximum tenure: Up to 25 years
- LTV: Up to 80%
- Processing fee: Up to 3% + GST
- Overdraft: Available
- Balance transfer: Available
- Property types: Residential, commercial, industrial and institutional
- Processing timeline: Around 15 working days, indicative
IDFC FIRST Bank stands out for its longer repayment tenure and higher LTV option. A tenure of up to 25 years can help eligible borrowers manage their monthly EMI, although a longer tenure can increase the total interest paid over the loan period.
An LTV of up to 80% may also allow eligible borrowers to raise a larger amount against the value of their property. The processing fee can be higher than some competing lenders, making it important to consider the complete cost of borrowing.
4. State Bank of India (SBI)
- Interest rate: 10.00% p.a. onwards
- Loan against property: Available
- Loan against mortgage of immovable property: Available
- Rent Plus scheme: Available
- Processing fee: Around 0.35% to 1% + GST, depending on scheme
- Tenure: Up to 15 years in typical LAP structures
- LTV: Depends on applicable scheme and property
- Property types: Residential and commercial
SBI offers different property-backed loan products, so the applicable terms depend on the specific scheme and borrower profile.
For borrowers considering a public-sector bank, SBI can be included in the comparison. However, the specific product, applicable interest rate, loan amount and property valuation requirements should be checked before proceeding.
5. Axis Bank
- Interest rate: 9.15%–10.25% p.a.
- Minimum loan: ₹5 lakh
- Maximum tenure: Up to 20 years in select cases
- Processing fee: 1% of loan amount + GST
- Overdraft: Available
- Lease Rental Discounting: Available
- Balance transfer: Available
- Property types: Residential and commercial
Axis Bank offers several options for borrowers seeking property-backed financing. The maximum tenure can extend to 20 years in select cases, which can help reduce the monthly EMI compared with a shorter repayment period.
The bank also provides options such as overdraft, balance transfer and lease rental discounting, depending on the borrower's eligibility and financing requirement.
6. ICICI Bank
- Interest rate: 10.60%–12.25% p.a.
- LTV: Up to 75%
- Maximum tenure: 15 years
- Minimum CIBIL: 700+ preferred
- Overdraft: Available
- Provisional sanction: Available
- Top-up loan: Available
- Property types: Residential, commercial and industrial
- Processing fee: Up to 2% + GST, profile-based
ICICI Bank provides LAP against eligible residential, commercial and industrial properties. The product includes features such as provisional sanction, overdraft and top-up facilities.
The LTV can go up to 75%, subject to eligibility and applicable property conditions. The interest rate can vary based on factors including the borrower's credit profile, loan amount and other lending criteria.
Which Bank Is Suitable for a Loan Against Property?
The most suitable lender can vary depending on the borrower's financial profile and funding requirement.
Federal Bank offers a combination of a starting rate of 8.20%, a loan limit of up to ₹20 crore and both term loan and overdraft options.
IDFC FIRST Bank may be relevant for borrowers looking for a longer repayment period or higher LTV. HDFC Bank offers a structured LAP product with a 15-year tenure and overdraft facility.
SBI may appeal to borrowers who prefer a public-sector bank, while Axis Bank provides options such as overdraft, balance transfer and lease rental discounting. ICICI Bank offers higher LTV options along with facilities such as provisional sanction and top-up loans.
The right choice ultimately depends on the loan amount required, property value, income, credit profile and repayment capacity.
What to Check Before Applying for a LAP?
The interest rate is an important factor, but borrowers should consider the complete cost of the loan before selecting a lender.
Key factors to compare include:
- Final interest rate offered
- Maximum eligible loan amount
- Applicable LTV
- Processing and other charges
- Property valuation charges
- Repayment tenure
- Prepayment or foreclosure charges
- Approval and disbursement timeline
- Overdraft or balance transfer availability
- Property eligibility requirements
A lower interest rate can reduce the overall interest burden, but a higher processing fee or other charges can affect the total cost. Similarly, a longer tenure can reduce the EMI while increasing the total interest payable.
The final terms offered by a bank may also differ from the rates and limits advertised on its website. Credit score, income, employment or business profile, property type, property location and loan amount can all influence the final sanction.
Final Thoughts
A Loan Against Property is a long-term financial commitment, so the decision should be based on the complete loan structure rather than a single advertised rate.
The six banks discussed above offer different combinations of interest rates, loan amounts, LTV limits, repayment tenures and facilities. Federal Bank offers a high loan limit along with a competitive starting rate, while IDFC FIRST Bank provides longer tenure and higher LTV options. HDFC Bank, SBI, Axis Bank and ICICI Bank each have their own product features that may suit different borrower requirements.
Before finalising a lender, borrowers should compare offers from multiple banks and evaluate the total cost, repayment terms and eligibility conditions. The final sanctioned offer should be considered more important than the headline rate advertised online.
