Login to Internet banking
A brand-new experience - smarter, faster, and secured
Introducing the First-in-industry IDFC FIRST Bank's Super Account
Request a Callback
You gain a dedicated partner committed to helping you reach your full potential and achieve new heights
Know More- Account with Auto-Sweep FD
- Account for all Domestic businesses
- Account for Importers & Exporters
- Account for Start-ups
- Accounts for Trusts/Associations/Societies/Clubs
- Account for Merchants
- Account for Agri Traders
- Account for Self-employed professionals
- Special Purpose Accounts e.g. SNRR, RERA, EEFC
BRAVO (Auto Sweep)
Convert the idle funds in your current account into a fixed deposit with the BRAVO feature.
Know More
Zero Forex Markup Current Account
Maximise your savings and boost profitability with our Zero Forex Markup current accounts
Know More
Make more than one online payment in just a few clicks with IDFC FIRST Bank Bulk Payments
Know More
A Card that Powers your Savings & Lifestyle
IDFC FIRST Bank HPCL Credit Card
Most Searched
Earn up to 6.50% interest on your Savings Account
Open Account Now
Download our app
Get instant help for all your queries in one place
Explore Personal
- Accounts
Tools & Calculators
Privilege Program
- Privilege Program
Unlock features, exclusively available
only on the IDFC FIRST Bank app
FinFIRST Blogs
Seven factors that influence your loan against property's interest rate
key Takeaways
A Loan Against Property (LAP) helps you raise large funds during emergencies by leveraging an owned property.
- IDFC FIRST Bank offers up to 80% of property value as loan with easy online application and overdraft facility.
- Your credit score, income profile, property type, and tenure impact LAP interest rates.
- Choosing between fixed and floating rates is crucial for optimising your repayment strategy.
Many people seek a personal loan to meet their emergency expenditures. A good choice if you require a relatively small amount. However, if you require a bigger amount, there’s a better alternative available: Loan Against Property (LAP).
With LAP loans, you can borrow funds from your bank against a property you own and pay back the loan amount, plus interest within the repayment period. The bank uses your property as a security in cases of default. Loans against property offer low interest rates compared to personal loans or other unsecured borrowings.
Most banks offer you a mortgage but some offer add-on benefits too. For instance, IDFC FIRST Bank comes with a loan against property that offers 80% of the market value of your property. Whether it’s a residential, commercial, or industrial property, you can leverage your property to secure loans of up to ₹15 crores at competitive interest rates. If you have rental income, you can also opt for a lease rental discount for an affordable loan. The online application process makes it easier for you to obtain a loan against property without hassles.
However, when it comes to repayment, the factor most people worry about is the interest rate. Therefore, it is important to understand what affects the interest rate applicable for a LAP.
READ MORE
Factors affecting Loan Against Property Rates
Your credit score
Be it a housing, LAP, auto, or personal loan, your credit score is at the core of all your loan applications. A high credit score indicates responsible financial behaviour and works in your favour via higher loan amount eligibility and a lower interest rate.
Paying your bills on time, responsible use of credit cards, and ensuring you do not seek too many loans or credit cards at a time are some ways to keep your credit score high. Maintaining a credit score equal to or higher than 750 is recommended.
The younger you are, the lower is the interest rate a lender will levy because with younger applicants banks have a higher chance of getting back their loan repayment in full.
The property you wish to mortgage
Banks offer you a LAP after inspecting the property in question. Depending on its type (residential, commercial, industrial, warehouse), location, date of construction, etc., the mortgage amount is decided. So, properties in good conditions and premium locations will fetch a lower rate of interest.
The loan tenure
The longer the loan’s repayment tenure, the lower will be the rate of interest. Please note that, unlike personal loans, a LAP is a long-tenured loan, so it makes sense to discuss or negotiate the interest rate with your lender first.
Your profile
It is your profile the bank will check before zeroing down on the LAP amount and the interest rate. Your job profile, income, and location hold sway. If you are living in a metro city with a salaried job, you are more likely to get a favourable loan amount and interest because the banks will consider you as a solid candidate who will not default on repayment.
The type of interest rate you choose
There is fixed interest rate and then there is floating rate of interest, which is based on a benchmark index and will change from time to time. Before you sign the dotted papers of your LAP, discuss the type of interest rate you wish to opt for with your lender. Additionally, the LAP interest rates also depend on repo rates set by the RBI (Reserve Bank of India) which may vary from time to time.
Your income tax returns
When the lender asks for your income tax returns (ITR), it is to inspect your source of income generation. Consistent returns filing for the last three to four years will yield you a more favourable loan amount and interest. Please note, ITR is also asked when you apply for auto, home, personal loans, etc.
Your age
The younger you are, the lower is the interest rate a lender will levy because with younger applicants banks have a higher chance of getting back their loan repayment in full.
LAP is a useful credit tool to access during emergencies and makes for a solid alternative to personal loans. It is also a better option to choose than indiscriminate use of credit cards.
Conclusion
A loan against property is a powerful credit tool when you need high-value financing during critical times. IDFC FIRST Bank’s LAP offering stands out with its high loan amount, competitive interest rates, flexible options, and transparent terms. By understanding factors that affect interest rates and planning wisely, you can make the most of your mortgage loan without compromising financial stability.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
Summarize with AI
