How a loan against property is sized
With a loan against property (LAP), you pledge a property you own and keep using it while you repay. The value of the property sets one limit, and your income sets another. The lower figure is your likely loan amount.
- Property limit (LTV). Loan-to-value is the share of market value a lender will fund. Lenders use their own valuation, which may differ from what you expect.
- Repayment capacity. The calculator allows 10 percentage points more FOIR for LAP than for personal loans, up to the overall 80% cap, because the loan is secured.
How much each property type may get
| Property type | LTV used | On ₹1 crore value |
|---|---|---|
| Residential flat or house | 65% | ₹65 lakh |
| Commercial shop or office | 55% | ₹55 lakh |
| Industrial property | 45% | ₹45 lakh |
| Non-agricultural plot | 40% | ₹40 lakh |
These are benchmarks used for the estimate. Actual LTV varies by lender, location and the condition of the property, and some lenders do not accept certain property types at all.
Worked examples
Each example assumes a CIBIL score of 750 or above, no existing EMIs and a 15-year tenure at the calculator's indicative 9.25% rate.
| Borrower and property | Likely loan | EMI | Limit |
|---|---|---|---|
| ₹60,000 salary, ₹80 lakh home | ₹34.97 lakh | ₹35,991 | Income |
| ₹1 lakh salary, ₹80 lakh home | ₹52 lakh | ₹53,518 | LTV |
| ₹1 lakh salary, ₹80 lakh shop | ₹44 lakh | ₹45,284 | LTV |
| ₹15 lakh annual profit, ₹1 crore home | ₹65 lakh | ₹66,897 | LTV |
A valuable property doesn't guarantee a large loan. In the first row, the home's value would allow ₹52 lakh, but income limits the loan to about ₹35 lakh.
Eligibility checks for LAP
- Age: at least 21, with the loan ending by 70.
- Tenure: up to 15 years in this calculator.
- Minimum salary: ₹25,000 a month in metro cities, ₹20,000 in Tier 1 cities and ₹15,000 in Tier 2 and 3 towns.
- Self-employed income: at least ₹2.5 lakh a year in ITR profit plus depreciation, with 2 years in business and 2 years of returns preferred.
- CIBIL score: 700 or above is comfortable. From 600 to 649, some NBFCs may lend at a higher rate.
- Property papers: clear title and an approved plan. The calculator fails this check if either is missing.
- Minimum loan: the calculator treats ₹5 lakh as the smallest typical LAP.
Check your property papers early
Paperwork problems stop many LAP applications, so it helps to collect the documents before you apply. These usually include the title chain, sale deed, approved building plan and latest property tax receipt. If the property has several owners, lenders commonly need all of them to join the loan. If it's already mortgaged, ask about a balance transfer or top-up instead.
Understand the risk before you pledge
LAP rates tend to be lower than unsecured loan rates, and the long tenure keeps the EMI manageable. The trade-off is that your property is the security. If you can't keep up with the EMIs, the lender can take action to recover its money, including selling the property. A few checks can reduce that risk:
- Borrow what you need, not your full limit. A lower EMI gives you more room if your income falls.
- Compare the total cost. Check processing fees, valuation and legal charges, and any prepayment terms along with the rate.
- Test a lower-income month. If you are self-employed, make sure you could still pay the EMI in a weak month.
- Ask whether the rate is fixed or floating. With a long loan, a rise in a floating rate can noticeably affect what you pay.
If you don't want to pledge property, compare your options with the business loan or personal loan calculators.