Current LAP interest rates — banks and NBFCs
Tap a column header to re-sort. The rate column shows the starting rate for top-credit individual borrowers on a residential-LAP product; typical sanctioned rates run 100–200 bps above. The foreclosure column reflects the position for individual borrowers on the floating-rate variant — for non-individual borrowers (companies, partnerships, HUFs, proprietorships), the bank's original sanction-letter terms still apply and can range 2–4%.
| Bank | Type | Rate (%) | Foreclosure (%) | Notes |
|---|---|---|---|---|
| SBI | Public sector | 10.00 | 0.00 | Salaried starting 10.00% (effective 1 Apr 2026), self-employed from 11.60%; upper end ~11.80%. Linked to 1-yr MCLR 8.80% (15 Jan 2026) + spread. LTV up to 65% for loans up to ₹1 Cr. Tenure 5–15 yrs. Processing fee 1% of sanctioned amount, capped at ₹50,000 + GST. Foreclosure: NIL for individual borrowers on floating-rate LAP (per RBI guideline); 2–3% applies for non-individual / business-purpose loans. Min income ₹25,000/month. |
| ICICI Bank | Private | 9.55 | 4.00 | Residential LAP starts ~9.55% p.a. (salaried, top profile); aggregator starting bands vary 9.00–10.60%. Range up to 12.00% p.a.; commercial property 9.55–12.00%. Loan up to ₹5 Cr; tenure up to 15 yrs. CIBIL ≥ 700 required. Foreclosure: NIL for individual borrowers on floating-rate LAP; 4% + applicable charges for non-individual borrowers (companies, partnerships, HUF, proprietorships). Rates valid till 31 May 2026. |
| HDFC Bank | Private | 9.50 | 0.00 | Floating range 9.50–11.00% p.a. (repo 5.25% + spread 3.00–4.50%); fixed variants 11.80–13.30%. LTV up to 65% of market value; tenure up to 15 yrs. Processing fee up to 1% (min ₹7,500 + GST). Foreclosure: NIL for individual borrowers on floating-rate LAP; part-prepayment up to 25% of outstanding p.a. free, excess 2.5% + GST. Commercial property typically priced 25–50 bps higher. Rates effective May 2026. |
| Axis Bank | Private | 9.25 | 0.00 | Floating range 9.25–11.75% p.a. (RLLR-linked); term-loan band 9.50–10.00%, overdraft 10.00–10.25%. Min loan ₹5 lakh; tenure up to 20 yrs. Processing fee 1% or ₹10,000 whichever higher. Foreclosure: NIL for individual borrowers on floating-rate LAP; 3–4% + GST on outstanding principal for non-individual / business-end-use loans. Fixed-rate variant attracts 2% on outstanding. Rates effective Apr 2026. |
| LIC Housing Finance | NBFC | 9.10 | 0.00 | Starting 9.10% p.a. (residential LAP, top profile); range up to 11.55% p.a. Loan from ₹2 lakh; tenure up to 15 yrs. Linked to LHPLR (LIC Housing Prime Lending Rate). Foreclosure: NIL for individual borrowers on floating-rate LAP after 12 months of disbursal; 2–4% of outstanding for firms / companies. Aggregator quotes vary 8.50–9.70% starting. Rates effective 2026. |
| Bajaj Finserv | NBFC | 8.45 | 0.00 | Bajaj Housing Finance LAP starts 8.45% p.a.; Bajaj Finance NBFC pricing 9.00–12.00% p.a. Loan up to ₹10.5 Cr; tenure up to 17 yrs; balance transfer from 9.10%. Foreclosure: NIL for individual borrowers on floating-rate LAP availed for non-business purposes (per RBI guideline); up to 4.72% incl. taxes for fixed-rate or non-individual / business-purpose borrowers. Disbursal in ~72 hrs. Rates effective 2026. |
Rates verified on 2026-05-17. Source: Lender websites + 2026 rate aggregators (Paisabazaar, Bajaj Markets, CreditCares, Money Matrix Hub); researched 2026-05-17. Refresh next: 2026-08-17.. Bank rates change frequently — confirm on the bank's official page before applying or depositing.
LAP vs home loan — why the premium
A home loan can only be used to buy or construct a residential property, and the property being financed is itself the collateral. LAP pledges an existing property you already own, and the borrowed amount can be used for any legitimate purpose — business working capital, child's overseas education, medical emergency, debt consolidation, home renovation that doesn't qualify for a top-up home loan, and so on.
Three things drive the 150–250 bps premium LAP carries over home-loan rates:
- End use isn't housing. RBI risk-weights LAP higher than housing loans because the use of funds is unrestricted; the regulatory capital cost the lender carries is higher.
- Tighter LTV. Lenders cap residential LAP LTV at 60–65% of market value vs 75–90% on a regular home loan, which means lower asset cover per rupee lent and a higher effective risk premium.
- Higher operational risk in default. Foreclosure on an owner-occupied home a borrower bought to live in is socially / legally harder than foreclosing on a pledged asset securing a business loan — the average recovery timeline on LAP defaults is longer.
Loan-to-value caps and what they mean for the actual cheque
LTV is the loan amount divided by the lender's own assessed market value of the property, not your purchase price or registry value. Most lenders' valuations come in 10–20% conservative versus the open-market asking price. Combined with the LTV cap, this means a property you'd sell for ₹1 Cr typically yields ₹50–55 lakh of LAP eligibility — not ₹65 lakh as a back-of-envelope reading of the LTV would suggest.
Asset-class-specific caps from the May 2026 rate cards:
- Residential property — typically 60–65% of valuation. Bajaj Housing Finance goes up to 75% on top profile sub-₹5 Cr tickets.
- Commercial property — typically 50–55%. Pricing typically runs 25–50 bps above residential LAP at the same lender.
- Property with an existing home loan — LTV applied to your equity (market value minus outstanding home loan), not full market value. A property with ₹40 lakh remaining home loan and ₹80 lakh valuation yields ~₹24–26 lakh of LAP eligibility.
Foreclosure under the 2025 RBI Directions
The RBI Pre-payment Charges on Loans Directions, 2025 — issued 2 July 2025 and applicable to all loans sanctioned or renewed on or after 1 January 2026 — extended the no-foreclosure-charge regime from floating-rate housing loans alone to all floating-rate loans to individual borrowers. The practical position for LAP:
- Floating-rate LAP to individuals (covering residential + commercial property pledges, for non-business or business purposes) — zero foreclosure / prepayment charge. This is a substantial improvement on the older regime, where LAP routinely carried 2–4% even for individual borrowers.
- Fixed-rate LAP to individuals — capped at 3% of the outstanding principal under the 2025 Directions. Lenders are required to disclose the charge upfront in the sanction letter.
- Non-individual borrowers (companies, partnerships, HUFs, proprietorships) — original sanction-letter terms still apply, typically 2–4% regardless of fixed or floating.
- Pre-2026 sanctions — original sanction-letter terms continue to bind until the loan is renewed or refinanced. Borrowers on older floating-rate LAP carrying a 2–4% prepayment penalty can sometimes negotiate a switch to the new Directions terms with the existing lender as part of a renewal.
Full prepayment math — interest saved, tenure reduction, break-even on a balance-transfer at a lower rate — is covered in the Mortgage Loan Prepayment calculator with both lump-sum and EMI-increase modes.
Fixed vs floating LAP
The market default for LAP in India is floating, linked to the lender's RLLR (Repo-Linked Lending Rate) or EBLR. Fixed-rate LAP is available at most banks as a separate variant, but typically priced 100–250 bps above the floating quote on the same profile — because the lender absorbs the rate risk over the loan's tenure (up to 15–20 years for residential LAP). The 2026 regulatory tilt makes the floating choice even sharper for individuals: zero foreclosure on floating vs 3% cap on fixed, identical interest-rate trajectory in a stable / falling rate environment, and the standard EBLR-reset benefit (quarterly EMI adjustment in line with RBI repo moves).
The full mechanics of EBLR and the trade-offs across loan types are covered in the Fixed vs Floating Loans guide .
Borrower profile and pricing tiers
The starting rates in the table above are the floor for the strongest credit profile — salaried borrower at a top employer, CIBIL 800+, comfortable debt-to-income ratio, banking relationship at the same lender. Pricing climbs from there in roughly three tiers:
- CIBIL 750+, salaried — starting rate or 25–50 bps above.
- CIBIL 700–749, salaried; or CIBIL 750+, self-employed professional — 50–150 bps above floor.
- CIBIL 650–700, or self-employed non-professional — 150–300 bps above floor; sometimes priced at the bank's upper-band rate (11–12% range).
For self-employed and non-individual borrowers, lenders place additional weight on IT returns (2–3 years of consistent income), GST returns where applicable, and bank-statement cash flow. NBFC lenders (Bajaj, LIC HFC) tend to be slightly more flexible on the income-documentation side than mainstream banks, at the cost of a 25–75 bps rate premium.