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Loan Against Property

A loan against property is a secured type of bank loan in which the property works as the collateral against the loan. These loans are usually taken for various financial purposes.

What is a loan against property?

A loan against property is a form of secured bank loan where the loan is backed by a property. You can take out a loan against your house or a parcel of land. When all the land titles are ready, you have a stable source of income and you are qualified, then this is a more affordable loan option. In spite of the fact that the interest rate is higher than a conventional home loan, it’s typically cheaper than a loan against security or a personal loan. You can get a loan against a residential property or a commercial property.

What is the purpose of a loan against property?

If you have a business then you will obviously need capital for its extension. If you happen to own a property then you can leverage it to collect money to take care of your business requirements.

You can also use a loan against property to finance your children’s education, urgent healthcare situations, marriage expenses and so on.

Advantages offered by a loan against property

Given below are the key benefits offered by a loan against property:

  1. Bigger loan amounts
  2. Loan against various types of properties
  3. You can get the maximum value out of your property
  4. Flexible repayment plan
  5. Opportunity to expand your business without reduction in capital
  6. Cheap interest rates
  7. Insurance cover on your loan amount
Differences between a loan against property and a home loan

There are certain differences between a loan against property and a home loan. A home loan is offered for buying a home. On the other hand, a loan against property is provided against an existing property. The end use of a loan against property is not monitored by the lender and you can use it for any purpose. However, the end use of a home is monitored by the lender to make sure that the loan is essentially used to pay the property seller. The interest rates on loan against properties are typically higher than home loan interest rates. The repayment terms of home loans are also longer than loans against properties.

Documents required to get a loan against property

Given below are the documents that you need to furnish when you are applying for a loan against property:

  1. Financial statements such as bank statement, income tax returns, profit and loss account, balance sheet and proof of business
  2. Photo identity – passport, driving license, voter identity card or PAN card
  3. Proof of signature
  4. Residential proof
  5. Age proof

Banks offering loan against properties in India

Given below are the names of the banks and financial institutions that offer loan against property in India:

  1. HDFC Bank
  2. ICICI Bank
  3. Deutsche Bank
  4. State Bank of India
  5. Axis Bank
  6. Bank of India
  7. GE Money

When you have a dream, you also have the challenge to accomplish it. A loan against property can help you accomplish your dream.

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