Loan Against Property Interest Rates | Mortgage Loan Interest Rates

What is the Loan Against Property Interest Rate?

A loan against property is one of the best financing options at a lower rate of interest for dealing with an unexpected financial crisis or meeting significant goals such as home purchase, a child's higher education, or funding a wedding. As the name suggests, the funds offered under this loan are secured by pledging a real estate asset as collateral to the lender.

Given the secured nature of this loan, when you apply for a mortgage loan with Hero FinCorp, we charge a lower interest rate on the funds disbursed. However, several factors influence a loan against a commercial property interest rate, and it is recommended that you become familiar with them before applying.

Applicable Fees and Charges on Loan Against Property

Whether you require funds to set up a new business or to deal with a medical emergency, Hero FinCorp is always there to financially support you with our affordable mortgage loan. We charge an interest rate on mortgage funding after reviewing various parameters such as your income, occupational status, and the condition of the commercial property in question. So, if you have a regular income and a commercial real estate property in good condition, visit Hero FinCorp now to apply for a loan against property.

INTEREST RATES

11% - 17%
(Reducing balance interest Rate)

PROCESSING FEE

Processing fee is 1% + GST

(Reducing balance interest Rate)

FORECLOSURE CHARGES FOR TOP UP

As per Sanction Letter

(Reducing balance interest Rate)

Apply for Loan Against Property

How to Calculate the Rate of Interest on a Loan Against Property?

At Hero FinCorp, you can choose between fixed and floating mortgage loan interest rates. Here is what these rates mean and how they are calculated.

Fixed Interest Rate
Under this mortgage loan arrangement, the interest rate is fixed and remains the same till the conclusion of the loan term. A fixed interest rate is charged on the outstanding loan balance, and as the loan tenure passes, you are required to pay a lesser amount towards interest and more on principal outstanding.
You can compute the EMI for a fixed interest rate mortgage loan using the following formula
E = [P x R x (1+R)^N] / [(1+R)^(N-1)]
Here,
E refers to the Equated Monthly Instalment Amount
P stands for Principal Mortgage Loan Amount
R means applicable Rate of Interest
N is the Repayment Period in months

Calculate LAP EMI

Factors that Influence Loan Against Property Interest Rates in India

We consider the following aspects while deciding on a loan against the commercial property interest rate applicable to your profile:

Age

Age is crucial for establishing a property loan interest rate. If you are nearing retirement or have recently begun your career, the lender’s risk is assumed to be high. As a result, such profiles may attract a higher interest rate.

Property Location & Condition

A property's location and condition significantly impact mortgage interest rates. A city-center property with nearby amenities qualifies for lower interest rates. Likewise, a well-maintained property, free from leaks and cracks, secures loan approval at a lower interest rate due to its higher resale value, influencing the lender's risk perception.

Credit Report

A credit report is issued by authorised credit bureaus, and it consists of details of your financial behaviour in terms of debt repayment. If your credit report reveals missed EMIs, loan settlements, multiple hard inquiries, and loan defaults, your application may be rejected, or you will be approved for a higher interest rate mortgage loan.

Income

Although the funds offered under this loan are secured by high-value real estate assets, lenders still want you to be in the high-income bracket to sanction funds at a lower rate. The higher income assures the lender that their funds are safe and that a default situation is unlikely.

Loan Amount

If you have an average credit profile and your income barely meets the lender's qualifying criteria, it is preferable to take out a smaller loan to reduce the credit risk associated with your profile. A lower loan amount might help you secure funds at a lower mortgage rate.

Type of Property

The type of property being offered as collateral matters. Residential properties may have different interest rates than commercial properties. The location and condition of the property also influence rates.

How to get the best Loan Against Property Rate of Interest?

Add a Co-applicant

If you have an average credit score and meet the lender's eligibility requirements, you should consider adding a co-applicant. A co-applicant could be your spouse or parents with a good income and no previous default history.

Opt for a Longer Repayment Tenure

You can make your EMI more affordable by choosing a longer repayment period. If you have a low income, extending your tenure allows you to manage your debt without jeopardising your budget, while allowing lenders to approve funds at a lower rate.

Additional Source of Income

If you have a secondary source of income and are earning a decent and consistent income from it, include it on your loan application. Additional income increases your repayment capacity and qualifies you for a low-interest loan against commercial property.

Clear Existing Debts

If you have various ongoing debts in your name, you are more likely to have a poor debt-to-income ratio. Before submitting your mortgage application, if your budget permits, foreclose some of your existing loans to improve your debt coverage ratio and qualify for a lower interest rate mortgage loan.

Points to Consider while Availing of a Loan Against Property

When applying for a mortgage loan, you should consider the following factors in addition to the loan against the property interest rate.

Associated Fees

Before signing, examine your loan against property agreement carefully. Review the mandatory fees, such as processing fees, as well as situational fees, such as rescheduling and prepayment fees. Also, keep an eye out for foreclosure provisions.

Eligibility Criteria

Scrutinise your preferred lender's qualification criteria, and only go with them if your profile perfectly matches their requirements. It will expedite the approval process and qualify you for a lower mortgage rate.

Disbursal Time

A loan against property can assist you in dealing with a variety of financial crises, particularly a medical emergency. As a result, it is critical to examine how long your lender takes to disburse funds.

Loan Amount

Before deciding on a lender, determine whether the maximum amount offered by your preferred lender is sufficient to meet your financial needs.

Frequently Asked Questions (FAQs)

Is there a way to reduce the mortgage loan interest payable?

Yes, there are ways, such as, making a higher down payment, choosing a shorter loan tenure, or proving your high credit score.

What is the maximum funding that I can avail on a property as LAP?

The maximum funding that one can avail on a property is up to 75% of the property's market value. However, it also depends on the borrower's profile, income, credit score, and other factors.

What is the maximum repayment tenure of loan against property?

The maximum repayment tenure of a Loan Against Property is up to 10 years, but it may vary depending on the borrower's profile.

Can I get a low-interest mortgage loan if my monthly income is low?

Yes, you can still get a low-interest loan if you include a co-applicant on your loan application. Co-applicants can include your spouse, parents, or a close relative. However, ensure that the person you name on your application has a good credit history. Also, inform them that they will be responsible for half of the EMI.

Is it possible to get a tax benefit on a loan against commercial property?

No, a loan against property does not provide any direct tax benefits. However, in some cases, such as if you obtained this loan for business purposes, you may be eligible for tax benefits.

What is the distinction between a floating and fixed mortgage loan interest rate?

When you choose a floating rate mortgage, the interest rate will fluctuate throughout the repayment period. In contrast, the interest rate on a fixed-rate mortgage will remain constant until the loan is paid off. Managing your EMIs is much easier with a fixed rate because you know exactly how much you need to pay each month towards your debt obligations.

Can I foreclose my mortgage loan?

Yes, foreclosure is allowed for a mortgage loan. However, the lender will charge a pre-closure fee on the outstanding debt to compensate for the loss of interest income.