FAQ- Loan against Property


  1. What is a loan against property?

When you keep your property as a collateral to the lender and ask for funds against that property, such type of loan is called a mortgage loan or a loan against property. Since you pledge your asset or mortgage your property as a security, therefore this loan falls under the category of secured loans.

2. How does loan against property work?

In loan against property, once your loan application comes under process, the lender would evaluate the market value of the property you keep as a collateral. The lender will then provide you loan which will be a certain percentage of your property value. It usually falls between 50%-75%. Some lenders may also offer loans up to 90% of the property value. The funds will be given in advance. You can then use this amount to meet your needs. But you should remember that this amount is repayable, wherein you will have to repay the amount to the lender with interest.

3. What types of property can you mortgage to take a loan against property?

Loan against property is given on different types of property be it commercial or residential. Lenders offer loan on

  • Self occupied residential property.
  • Self occupied commercial property.
  • Leased residential property.
  • Leased commercial property.
  • Lease rental discounting against commercial property.
  • Loan is also given to purchase a commercial property. 

4. What factors are considered while sanctioning a loan against property?

Following factors are taken into consideration while providing a loan against property:

  • Borrower’s Age.
  • The requirement and eligibility of the borrower.
  • Borrower’s Income and repayment capacity.
  • Whether salaried or self-employed.
  • Borrower’s CIBIL score
  • Property’s registration.
  • Property’s market value.

5. Does CIBIL matters in loan against property?

Yes, CIBIL score is an essential factor in determining your creditworthiness. A good credit score makes you reliable in the eyes of the lenders and it will enhance the chances of your loan approval. The minimum CIBIL required is 600 (but this varies as per the lender’s policies).

6. At what interest rates can I have a loan against property?

The interest rates is based on various factors such as cost of funds/capital, loan tenor, credit profile of borrower, net income, employment or business stability, existing monthly obligations, loan type, type and value of security, loan amount etc.

The interest rate starts from somewhere around 6.95%per annum and varies from lenders to lenders. Although the fixed rate of interest changes and varies from banks to banks, the interest rates is always between 8.50% – 12.00% per annum.

7. What is the loan repayment tenure in the loan against property type?

The loan repayment tenure is long which usually extends up to 15 years, but some lenders offer repayment tenure up to 20 years.

At Mantra, we will guide you choose a tenure that is per your repayment capacity.

8. How much time does it take to get a loan against property sanctioned?

If everything falls in place, it will just take 7-10 business days. Some lenders may do the disbursement earlier than this period, depending upon fulfilling their criteria and their policies.

But delay in loan disbursal are often caused due to borrower’s inability to provide documents required by the lenders.

9. What factors affect loan against property?

Although loan against property is a secured loan, there are certain factors that affect the chances of approval of loan application and the amount to be sanctioned. These are:

  • Borrower’s profile
  • The purpose for which loan is taken.
  • Borrower’s CIBIL score.
  • Property value.
  • Property status(whether property is registered or not, Title Deeds are clear or not, whether its free from any litigation etc).
  • 10. Can I get tax benefits if I avail for a mortgage loan?

Yes, you can claim tax exemption on the interest paid if the amount is for business purpose under section 37 (1) of the Income Tax Act.

In the similar manner if you are salaried and you use the amount to purchase another property, then you can claim tax benefit under section 24 (b) of the Income Tax Act.

11. How is the eligibility for loan against property calculated?

The eligibility criteria for most lenders are as follows:

21 years- 60 yearsBetween 23 years- 65 years
Work ProfileIn govt. sector, public sector or private company.Self Employed with steady income/ self-employed professionals(doctors, engineers, dentist, architects, chartered accountants and the likes).
CIBIL Score700+700+
AssetsMust own a commercial or residential propertyMust own a commercial or residential property
  1. 12. On what basis does lenders asses how much amount should be funded?

Generally, lenders assess the quantum of amount to be approved based on the following factors:

Applicant’s creditworthiness.

Applicant’s eligibility.

Property’s current market value.

Property’s status of registration and litigation.

Some other internal factors.

13. If I have a property jointly owned, can I still go for a mortgage loan?

Yes, you can go ahead for mortgaging a property that is jointly owned as long as all the co-owners consent. The co-owners can  apply as co-applicants.

14. What criteria does my property needs to fulfill in order to get it mortgaged?

  • The first and foremost condition is the property that has to be mortgaged should be free from any legal issues.
  • The property should have clear titles and should be registered in the name of the borrower.
  • The property should not have been kept as mortgage with any other financial institution.

15. How can Mantra help me get a loan against property?

At Mantra we will provide you a whole range of options of lenders to choose from regarding your loan against property requirement.

We can help you get the best deals in terms of loan amount at affordable interest rate, tenor suiting your repayment capacity, and amount that fulfills your needs.

16. What if I fail to repay my loan?

While not paying EMIs in the initial years will lead to penalty, continuance of irregular payment of EMIs will lead to severe consequences. Interest rates will start piling up, credit score rating will get reduced, finally it will lead to stringent action by the lenders that is seizure of property mortgaged.