Lending against property is one of the fastest-growing segments in non-bank credit. With the repo rate raised to 5.50%, borrowers who use property as collateral for business or personal needs should look closely at cost, tenure and risk.
What the data says
- Crisil estimates that LAP and secured MSME loans form about 15% of NBFC assets under management and could grow 26–27% in FY26–27, while cautioning on small-ticket LAP.
- RBI sectoral data on NBFCs (6 October 2026) shows NBFC credit up 15.8% and retail up 22%.
- Housing finance grew 12.1% against 3.8% earlier in the same data.
LAP versus a home loan
| Feature | Home loan | Loan against property |
|---|---|---|
| Purpose | Buy or build a home | Business or personal needs, as the lender permits |
| Pricing | Usually lower | Usually higher |
| Tax benefit | Section 24(b)/80C subject to conditions | Generally none for personal use; business use may qualify as an expense |
| Tenure | Up to 30 years | Often up to 15–20 years |
EMI at different rates (₹50 lakh, 15 years)
| Rate | EMI |
|---|---|
| 8.50% (home loan, for comparison) | ₹49,237 |
| 9.50% | ₹52,211 |
| 9.75% | ₹52,968 |
| 10.00% | ₹53,730 |
| 10.50% | ₹55,270 |
A 25 bps rise from 9.50% to 9.75% adds about ₹757 a month. At 10%, total interest over 15 years would be about ₹46.7 lakh. The rates shown are illustrations, not offers.
Checklist before taking a LAP
- Ask whether the rate is floating or fixed, and how it is benchmarked.
- Compare total cost: processing fee, legal and valuation charges, and prepayment terms.
- Borrow only what the cash flow can service in a stress scenario.
- Confirm title and encumbrances on the property.
- Do not pledge the family home for speculative needs.
Frequently asked questions
Is LAP cheaper than a personal loan?
Generally yes, because it is secured, though pricing varies by lender and profile.
Can I prepay a LAP?
Prepayment terms differ. Individual floating-rate borrowers generally face no foreclosure charges under RBI rules; others should read the agreement.
Do I get tax benefits on LAP?
Not as for a home loan. Business use may allow interest as an expense; consult a tax professional.
What is the typical LTV?
It varies by lender and property type; ask your lender for the current limit.
Sources
- Crisil Ratings commentary on LAP and secured MSME lending, 2026
- RBI NBFC sectoral credit data, 6 October 2026
- Easiloan EMI calculations
This article is for general information only and is not financial, legal or tax advice. Figures are as reported on the date of publication and may change; EMI examples are illustrative, not offers. Please confirm current rates, charges and eligibility with the lender before deciding.