What is loan against property in India is a question that helps you learn how to turn your house or shop into immediate cash. A loan against property in India is a type of secured credit where you pledge your residential or commercial asset to a bank. Unlike a home loan, the funds from a loan against property (LAP) can be used for any legal purpose. People ask what is loan against property in India to understand how they can get large funds at interest rates much lower than personal loans.
In February 2026, the market for a loan against property in India remains strong. The Reserve Bank of India (RBI) kept the repo rate at 5.25% in its recent meeting. This stability makes a loan against property in India a top choice for those needing long-term capital for business or education.
Current Interest Rates for Loan Against Property in India (2026)
To truly grasp what is loan against property in India, you must look at the cost of borrowing. Banks like HDFC Bank have updated their lending rates. As of February 7, 2026, HDFC Bank’s Marginal Cost of Funds-based Lending Rates (MCLR) range from 8.25% to 8.60%.
HDFC Bank MCLR Rates (Effective Feb 2026)
| Loan Tenure | MCLR Rate (p.a.) | Monthly Change |
| Overnight |
8.25%
|
No Change
|
| 1 Month |
8.25%
|
No Change
|
| 1 Year |
8.40%
|
No Change
|
| 2 Year |
8.50%
|
No Change
|
| 3 Year |
8.60%
|
0.05% Increase
|
The bank raised the 3-year tenure rate by 5 basis points. Borrowers looking for a loan against property in India with long repayment periods should check how these changes affect their home loan vs loan against property comparison. The current HDFC Bank base rate stands at 8.80%.
How Loan Against Property in India Works
Knowing what is loan against property in India requires an understanding of the collateral process. You offer the bank the title deeds of your property. The bank then gives you a percentage of the property value, known as the Loan-to-Value (LTV) ratio.
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Residential Properties: You can get 60% to 75% of the market value.
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Commercial Properties: The LTV is lower, usually 50% to 60%.
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Industrial Properties: These often get 40% to 50% LTV.
The property stays in your name, and you can still use it. The bank holds the papers as a guarantee. If you fail to pay, the bank can sell the asset to recover the debt. You can use a mortgage loan calculator to see your monthly payments before applying.
Eligibility for Loan Against Property in India
To apply for a loan against property in India, you must meet specific rules set by the RBI.
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Age: You must be between 21 and 65 years.
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Income: Salaried and self-employed people must show a stable income.
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Credit History: A high CIBIL score for LAP is needed for the best rates.
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Property Status: The property must be free from legal fights and have clear titles.
Most lenders check the business loan eligibility if you are a shop owner using your property for funds. Plus, your debt-to-income ratio should be low.
Documents Required for Loan Against Property in India
Applying for a loan against property in India involves serious paperwork. You should keep these ready:
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Identity Proof: PAN Card, Aadhaar Card, or Passport.
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Income Proof: Last 6 months’ salary slips or 3 years of ITR for business owners.
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Bank Statements: Last 12 months’ statements from your primary account.
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Property Papers: Original Sale Deed, Title Deed, and latest tax receipts.
Check the processing fee comparisons between different banks to save money during the application. For more on 2026 trends, visit The Economic Times.
Tax Benefits on Loan Against Property in India
A major part of what is loan against property in India is the tax angle. Unlike home loans, LAP does not automatically give tax breaks. But you can save tax in two cases:
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Business Use: If you use the money for business, the interest and loan processing fees can be listed as business expenses. This reduces your total taxable income.
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Home Renovation: If you use the cash to repair your house, you can claim tax benefits under Section 24(b).
You can read more in our tax benefits guide.
FAQ: What is Loan Against Property in India
1. Can I get a loan against property in India if I am self-employed?
Yes. Business owners often use a business loan against property to get working capital at low rates. You just need to show 3 years of ITR.
2. What is the maximum tenure for a loan against property in India?
Most banks offer a tenure of up to 15 years. Some NBFCs might extend it to 20 years.
3. How is the property value calculated for a loan against property in India?
The bank sends an expert for commercial property valuation or residential inspection. They look at the location, age, and local market price.
4. Are interest rates for LAP higher than home loans?
Yes. A loan against property in India usually has rates 1% to 2% higher than standard home loans since the end-use is not restricted. Check our interest rate comparisons for details.
5. Can I get an overdraft facility with a loan against property in India?
Yes. Many banks offer an overdraft facility basics where you only pay interest on the money you use.
6. Which are the top banks for LAP in India?
HDFC, SBI, and ICICI are the leaders. You can find a list of top banks for LAP in India on our portal.
7. What happens if I want to pay the loan early?
For floating-rate loans given to individuals, there are usually zero prepayment charges. Residential property loan guides often highlight this as a key benefit.
8. Is it better to take a personal loan or a loan against property in India?
LAP is better for large amounts since it has lower rates. See our personal loan vs LAP guide for a side-by-side view.
9. Can I take a loan against a plot of land?
Yes, but the LTV is usually lower for plots than for built-up houses.
10. What is the HDFC Bank 3-year MCLR for 2026?
The HDFC Bank 3-year MCLR is 8.60% as of February 2026.
Summary of Loan Against Property in India
A loan against property in India is a strategic financial tool. It allows you to use your property’s value without selling it. By understanding what is loan against property in India, you can manage big expenses like weddings, medical bills, or business expansion. Since the RBI repo rate is steady at 5.25%, 2026 is a good time to look for a nbfc vs banks for loans comparison.
Before you sign any papers, check the mortgage loan calculator to plan your budget. Always compare the processing fee comparisons to get the best deal. A loan against property in India is a long commitment, so choose your lender wisely and make sure your income is stable.
Turning your asset into a loan against property in India can be the smartest move for your future growth. Start by checking your CIBIL score for LAP today.
