What is a loan against property?

Updated September 2026 2 min read

How it works

You own a property. You mortgage it to a lender, who advances you a percentage of its assessed value. You repay in EMIs, typically over ten to twenty years. When the loan is cleared the mortgage is released and your documents come back.

You keep living in the property, or renting it out, throughout. Nothing about your use of it changes — only the legal charge over it.

What you can raise

Between 40% and 70% of assessed market value depending on the property type, capped by whether your income can service the EMI. Self-occupied residential sits at the top of the range; a plot sits at the bottom, and many lenders will not fund plots at all.

The value that matters is the lender’s valuer’s, which is routinely 10% to 20% below what owners expect.

What it costs

Market rates currently run roughly 9.25% to 16.5% a year. On top of the interest: a processing fee of around 0.5% to 2%, valuation and legal charges of perhaps ₹10,000 to ₹35,000 combined, mortgage stamp duty and registration — which on a large loan is a substantial line item — and property insurance.

What it is genuinely good for

• Business expansion where the amount exceeds what turnover supports unsecured.
• Consolidating expensive unsecured debt into something much cheaper.
• A long-term investment where a low monthly cost matters more than total cost.
• Funding when the business is young but the family owns property.

The trade-off, stated plainly

You pay for fifteen years instead of five, so total interest is higher even at the lower rate. And sustained default gives the lender legal recourse to the property.

That rarely happens, and businesses fund growth this way routinely. But it should be a decision made with a clear answer to one question: what happens to this property if the plan does not work? If you cannot answer that comfortably, borrow less.

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