If you own property, a loan against it is almost always the cheapest way to borrow a large sum. It is also the only retail loan where the downside is losing the roof over your head, which is why the decision deserves more thought than the rate alone.
The numbers
- Rate: roughly 9–11%, against 10.5–18% on an unsecured personal loan.
- Amount: 60–70% of the lender’s valuation of the property. Commercial property is usually funded at a lower percentage than residential.
- Tenure: up to 15 years, which is what makes large amounts affordable monthly.
- Timeline: two to four weeks — valuation, legal title check, then mortgage creation.
Where it genuinely wins
Debt consolidation. Someone servicing ₹18 lakh across cards and personal loans at 16–36% can often refinance the lot at around 10%. The EMI drops sharply. The discipline has to change too — clearing cards and refilling them leaves you with the old debt plus a mortgage.
Business expansion. Cheaper and longer than any unsecured business loan, and available when financials are too thin for one.
Education abroad. Large, predictable, and repaid over a decade rather than five years.
The overdraft variant most people miss
Instead of a term loan, ask for an overdraft against the property. You get a sanctioned limit, draw only what you need, and pay interest on the drawn amount alone. For lumpy business requirements this is materially cheaper, because you stop paying for money sitting idle.
What the lender checks
Clear and marketable title, an approved building plan, no existing lien, and — for older properties — remaining life. Ancestral property with multiple heirs and no partition deed is the most common reason a file that looked simple does not close.
The honest caution
Only borrow against your home for something whose repayment does not depend on that thing succeeding. Funding a venture with the family house is how families lose houses. Consolidation, education and a business with existing cash flow are fine. A speculative bet is not.
Criteria on the loan against property page, and a straight comparison with the unsecured route here. Send us the numbers.
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