2024 Loan Against Property Interest Rate Trends

Posted on Monday, April 29th, 2024 | By IndusInd Bank

Multiple factors influence the loan against property interest rates for 2024. These include macroeconomic factors like the external benchmark rates and monetary policy, along with other parameters like the borrower’s profile, property details, and LTV ratio. The interest rates vary from lender to lender and are based on their policies and the risk associated with the borrower.

Whether you are looking to finance business or personal needs, a loan against property (LAP) offers a convenient way to access the funds you need by utilizing the value of your commercial or residential property. Borrowers can pledge their property as collateral to secure a substantial loan amount at competitive interest rates, making LAP a versatile financial solution for various needs.

If you’re planning to apply for a loan against property in 2024, it’s important to understand the prevailing interest rate trends. These trends are influenced by various factors such as economic conditions, inflation, real estate rates, and changes in the repo rate made by the Reserve Bank of India (RBI).

These factors not only affect the loan against property interest rates, but also the overall cost of borrowing and your repayment obligations. Understanding these trends will help you navigate the loan process with confidence and ensure you secure the most favourable terms in sync with your budget and financial goals.

Factors Affecting Loan Against Property Interest Rates in 2024

In addition to the profile of the borrower, certain macroeconomic factors, like changes in the monetary policy and external benchmark rates, affect the interest rate for loans against property. Here’s how:

1. Monetary Policy

The RBI oversees the monetary policy in India to regulate inflation, supply, consumption, and economic growth. To ensure a balanced supply of money in the economy, it uses various instruments like the repo rate, credit control, open market operations, etc. Changes in these instruments affect the lending rates of banks and financial institutions.

For example, in response to increasing inflation levels, the RBI may raise the repo rates, resulting in higher borrowing costs for commercial banks. This, in turn, leads to elevated interest rates for borrowers. However, the RBI is expected to reduce the repo rate from June 2024.

2. External Benchmark Rates

External benchmark rates are the interest rates set by banks based on external factors such as market conditions or economic indicators. They directly impact the interest rates charged on loans, including loans against property. When external benchmark rates change, LAP interest rates may change in tandem, depending on the individual lender’s policies. 

3. Borrower’s Profile

When you apply for a loan against property, the bank will conduct a thorough review of your financial profile to determine your creditworthiness and risk level. This includes factors such as your credit score, employment history, and income stability to ascertain your financial responsibility and ability to repay the loan. A strong credit profile can result in lower interest rates and favourable loan terms.

4. Property Details

The type, location, and valuation of the property also influence the loan against property interest rate. For example, banks might have different rates for residential and commercial property. Additionally, properties in risky locations might attract higher interest rates. Lenders will also analyse the property’s valuation to determine its market value. A higher valuation might fetch a lower interest rate as it provides sufficient security for the loan amount.

5. Loan-to-Value (LTV) Ratio

The LTV ratio indicates the percentage of the property’s value that the bank extends as a loan. A lower LTV ratio indicates the loan amount is smaller than the property’s value, making it less risky for lenders. As a result, the borrower may qualify for a lower interest rate.

Secure an Affordable Loan Against Property with IndusInd Bank

IndusInd Bank offers competitive loan against property interest rates based on the borrower’s profile and the type of property they own. These interest rates are linked to external benchmark rates, which currently stand at 6.50%. Thus, borrowers can secure funding at favourable borrowing terms with IndusInd Bank.

With IndusInd Bank’s loan against property, borrowers also enjoy exclusive features and benefits like:

• A quick and streamlined process to raise immediate long-term funds
• Higher loan amount
• Multipurpose use to meet personal or business needs
• Wide-ranging repayment tenure of up to 20 years
• Hassle-free doorstep services

Visit the official website to apply for a loan against property today by entering customer details (name, mobile & city).

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author 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.