Minimalize your Interest Amount with Loan Against Property

A loan can be a source of quick finance when struck with a cash crunch. These days both banks and financial institutions offer loans to aid your emergencies. From funding a marriage to handling medical bills, you could count on a loan to assist you. However, the challenge here lies in picking the right loan.

These days there are many loans available in the market. There’s a good mix of unsecured and secured loans that come with their own set of advantages and disadvantages. You can choose a loan depending on your requirements.

If the interest rate charged on loans is something that concerns you the most, you may want to consider taking a secured loan, such as a Loan Against Property (LAP). When you take a loan against property, you pledge your property as collateral. The collateral acts as a security measure to the lender offering you the loan. With the offered collateral at stake, the lender is assured that you are more likely to repay the loan. This reduces the lender’s risk and thus, you stand to benefit from low interest rates offered to you. This is why Loan Against Property Interest Rates are usually lower than unsecured loans.

In addition to a predetermined interest rate that is already lower than other loans, you can also take several other measures to further minimize your interest amount.

Factors that Affect the Interest Amount Paid

Type of Property

You can offer your residential, commercial, or industrial property when taking a loan against property in India. However, the interest rate for each of these properties might differ. The interest rate might be lower on residential and commercial properties in comparison to an industrial property. You could check the interest rate offered for each type of property with your lender.


Having a good CIBIL score benefits your Loan Against Property Eligibility. With a credit score of 700 or above, you stand a chance of bargaining for a lower interest rate. Since you have a good credit score, your lender is more likely to believe that you are a good borrower who can pay your EMIs on time and thus, might offer you a better interest rate.

Loan Against Property Tenor

Loan Against Property Tenor plays a major role in determining the total interest you pay. A long-term loan will ease out the EMI but will increase the overall interest with each added month. A short-term tenor will increase the monthly instalment of the loan but you will end up paying less interest throughout the whole tenor.

Type of Interest Rates

Loan Against Property features two types of interest rate – fixed rate of interest and floating rate of interest. When you pick a fixed interest rate, you pay the same rate throughout the whole tenor. However, a floating interest rate is affected by changes in the market.

Loan against property is offered to salaried as well as self-employed people. Loan Against Property Documents Required for each of these borrowers differ and so does their interest rate based on the evaluation done by the lender through the documents submitted.

Additional Read: Benefits of Fixed Interest Rate Mortgages Loan

Type of Lender

Both banks and Non-banking Financial Companies (NBFCs) offer loan against property. The institution you take the loan from affects the interest rate too. When you take a loan against property from NBFCs like Bajaj Finserv, you are offered competitive interest rates that can be bargained upon.

When you take any loan, the interest you pay is a major cost that is added to the amount repayable. You can ease this burden by opting for a loan against property. Not only does this secured loan offer you a low interest rate to begin with but also gives you the benefit of influencing the interest amount through several other factors.