17 MAY, 2021

Real estate is one of the most lucrative investment vehicles to park your funds in. It not only could help you earn rental income but could also be useful when you need financial help. If you ever need funds, you can mortgage your property to avail a high-value loan against it. Here is a small guide on loan against property.

What is a Loan Against Property?

A loan against property is a secured loan that you can avail to meet your high-value financial requirements. In a loan against property, banks or financial institutions lend you money against an immovable asset like a property that you mortgage with them. The ownership of the mortgaged property remains as a security with the lender until you repay the loan. You can take a loan against property for personal and professional needs.

Features of Loan Against Property

Type of property

You can mortgage residential, commercial (shops and offices) or industrial property to avail loan against property. However, the property should be in your name or the co-applicants’ name. You can also mortgage a vacant plot of land to avail a loan against property.

Loan amount

The lender sanctions the loan amount based on the value of the mortgaged property. The loan amount usually ranges between 50-80% of the property value and can vary from lender to lender. The lender also considers the age and condition of the property at the time of its valuation. Also, your debt to income ratio, credit score and repayment capacity is taken into account while determining the loan amount.


The eligibility requirement of a loan against property can vary from lender to lender. However, the standard eligibility criteria to avail loan against the property are -

  • You should be an Indian resident.
  • If you are a self-employed individual, the minimum age to avail the loan is 21 years, whereas the maximum age could be 65 years at the time of loan maturity.
  • If you are a salaried individual, the minimum age to apply for the loan is 18 years, whereas the maximum age could be 60 years at the time of loan maturity.
  • You should be a graduate if employed with a private company or partnership firm. However, there is no such criteria if you are employed with Government or in Public Sector company or Public Limited company.
  • If you are self-employed, your business should be operational for the last three years and should have made consistent profits for the last two years.


Compared to a home loan, the tenure of a loan against property is shorter. The tenure of a loan against property is usually 15-20 years. A longer tenure can help you pay a lower EMI but can lead to an increase in total interest outgo. To save on the interest, you can prepay the loan whenever possible after considering the prepayment charges. If you can afford, you can also opt for a shorter tenure to repay the loan faster with higher EMI. However, it is important to assess your financial comfort while selecting the loan against property tenure, so that the loan does not put unnecessary pressure on your budget.


Before availing a loan against a property, you should know that the lender could confiscate and sell the mortgaged property to get the outstanding loan amount if you are unable to repay the loan.  In addition, you cannot sell the mortgaged property until you close the loan by repaying the outstanding loan amount.

In a Nutshell

Do you need funds? Do you have ownership of a property? Great, the solution is right before your eyes. You can easily avail a loan against property and fulfil many financial needs. It is cheaper than a personal loan, hence comparatively affordable. Also, you can continue residing in the property even after availing the loan against property. So, check your eligibility, and apply for a loan against property today!  

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.