Understand About Types of Mortgage Loans
Jun 12, 2025 | 4 mins read
A Loan Against Property (LAP) allows you to unlock the value of your property by using it as collateral to secure a loan. Understanding the associated Loan Against Property fees, processing charges and other costs is essential. Knowing these charges upfront ensures transparency and better financial planning. Use the Loan Against Property EMI Calculator to evaluate your EMI and total loan cost.
Here are the various fees and charges you might encounter while applying for a Loan Against Property:
1. Processing Fee
What It Is: A one-time fee charged for processing your loan application.
Purpose: Covers administrative expenses involved in evaluating your application.
2. Legal and Technical Charges
Legal Charges: Fees for verifying the property’s legal documents to ensure clear ownership.
Technical Charges: Costs associated with property valuation to assess its eligibility.
3. Stamp Duty and Registration Charges
What It Is: State-specific duties and registration fees applicable to property-backed loans.
Purpose: Ensures the legality of the loan agreement under government regulations.
A) Late Payment Penalty
What It Is: Penalty for not paying EMIs on time.
Typical Rate: 2-3% of the overdue EMI amount.
Impact: Affects your credit score and increases repayment costs.
B) Conversion Fee (Interest Rate Change)
What It Is: Charges for switching from fixed to floating interest rates or vice versa.
Typical Cost: ₹ 5,000 to ₹ 10,000 or a percentage of the outstanding loan amount.
C) Other Miscellaneous Fees
Document Retrieval Fees: Charged for providing duplicate loan statements or documents.
Statement Charges: Fees for additional account statements.
| Processing Fee: | Up to 3% of sanctioned amount + applicable taxes |
| Login Fee: | Up to Rs.5000/- (inclusive of applicable taxes) (nonrefundable) |
| EMI Dishonour/Bounce Charge* *A bounce charge is a charge for (i) dishonour of any repayment instrument; or (ii) non-payment of instalment(s) on their respective due dates due to dishonour of payment mandate or non-registration of the payment mandate | As shown in the table below |
| Loan sanction amount (in INR) | Charges in (in INR) |
| < ₹ 5 Lakh | ₹ 500 |
| ₹ 5 Lakh – ₹ 50 Lakh | ₹ 1000 |
| > ₹ 50 Lakh – ₹ 2 Crore | ₹ 1500 |
| > ₹ 2 Crore | ₹ 2000 |
| Penal Charge/Late Payment Charge (LPC): | Up to 2% per month (p.m.) on overdue EMI + applicable taxes |
| Annual Maintenance Charges (applicable only for Dropline Overdraft and Hybrid Overdraft) | Up to 0.25% + applicable taxes of Dropline Limit available at start of each year (i.e. first on 13th Month and then every anniversary thereon). |
| Document retrieval / Duplicate NOC charges | Duplicate NOC (charge is applicable for paper copy post 3 free copies per customer), list of documents, Photo copies of the documents (property & others) Up to Rs.1000/- + applicable taxes |
| Repayment instrument swap fee (per swap): | Up to Rs. 500/- + applicable taxes (applicable only for branch walk-ins) |
| Asset valuation and verification fee | Up to 1% of loan amount + applicable taxes |
| Documentation and repayment setup fee | Up to Rs.2,000/- + applicable taxes |
| Interest conversion fee | Floating interest rate to floating interest rate: 0.5% of balance Loan Amt. or Rs. 10,000/- whichever is higher + applicable taxes Floating interest rate to a fixed interest rate and vice versa: 1% of balance Loan Amt. or Rs. 10,000/- whichever is higher + applicable taxes |
| Charges incurred by LTF for initiating action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002: | Issue of Loan Recall Notice = Up to Rs. 500/ – |
| Issue of Demand Notice = Up to Rs. 1,000/ – | |
| Issue of Possession Notice = Up to Rs. 2,000/ – | |
| Applying District Magistrate Order = Up to Rs. 8,000/ – | |
| Taking Physical possession = Up to Rs. 20,000/ – | |
| Actual cost incurred will be debited for expenses pertaining to Publication of Possession Notice/ Publication Demand Notice/Publication of Sale cum Auction Notice. All applicable taxes will be added. | |
| Loan Cancellation Charges: | Up to Rs. 5000/– + applicable taxes |
| Recovery of proportionate actual expenses from disbursement date(s), from individual borrower(s) in | LAP – Up to 1% of total disbursed loan amount + applicable taxes in case of closure within 24 months |
| Foreclosure / Full Prepayment Charges – Loan Against Property: | For Individual Borrowers – |
| Floating Rate – Nil Charge | |
| Nil Charges where end use is not for business/commercial purpose For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% principal outstanding + applicable taxes* | |
| ii. Post 1 year of disbursement – up to 2% on principal outstanding + applicable taxes* | |
| * Note: To be NIL as per regulation starting January 01, 2026 | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% principal outstanding + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on principal outstanding + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% principal outstanding + applicable taxes* | |
| ii. Post 1 year of disbursement – up to 3% on principal outstanding + applicable taxes* | |
| *Note : To be NIL for MSEs as per regulation starting January 01,2026 | |
| Pre-payment Charges – Loan Against Property: | For Individual Borrowers – |
| Floating Rate – Nil Charge | |
| Nil Charges where end use is not for business/commercial purpose. For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Partial/Pre-payment amount + applicable taxes* | |
| ii. Post 1 year of disbursement – up to 2% on Partial/Prepayment amount + applicable taxes* | |
| *Note : To be NIL for MSEs as per regulation starting January 01,2026 | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Pre-payment amount + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Pre-payment amount + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Partial/Prepayment + applicable taxes* | |
| ii. Post 1 year of disbursement – up to 3% on Partial/Prepayment amount + applicable taxes* | |
| * Note : To be NIL for MSEs as per regulation starting January 01,2026 | |
| Foreclosure / Full Prepayment Charges – for Dropline Overdraft / Hybrid Overdraft | For Individual Borrowers – |
| Floating Rate – Nil Charge | |
| Nil Charges where end use is not for business/commercial purpose. For cases where end use is for business/commercial purpose | |
| i. Less than 1 year from disbursement – up to 3% on Dropline Limit + applicable taxes* | |
| ii. Post 1 year of disbursement – up to 2% on Dropline Limit + applicable taxes* | |
| * Note: To be NIL as per regulation starting January 01, 2026 | |
| Fixed Rate – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes | |
| For Non – Individual Borrowers – (Applicant/Co – applicant) | |
| Fixed/Floating rate loan – | |
| i. Less than 1 year from disbursement – up to 4% on Dropline Limit + applicable taxes* | |
| ii. Post 1 year of disbursement – up to 3% on Dropline Limit + applicable taxes* | |
| * Note : To be NIL for MSEs as per regulation starting January 01,2026 | |
| Pre-payment Charges – – for Dropline Overdraft / Hybrid Overdraft: | Part pre-payment of Loan toward limit reduction is not available |
| Non-Compliance Charges: | Up to 1% p.a. of principal outstanding loan amount + applicable taxes |
| Breakup between Principal & Interest: | As per Repayment Schedule |
| Example of SMA/ NPA classification: | More particularly mentioned under “Classification of Assets” under the head “Miscellaneous” |
| Field collection service fee: | Up to Rs. 500/- per collection + applicable taxes |
| Legal fees and charges: | As per actuals or Up to Rs. 50,000/- whichever is lower + applicable taxes |
| Recovery charges: | As per actuals or Up to Rs. 1,00,000/- whichever is lower + applicable taxes |
| Auction fees: | Up to 1% of auction sale amount + applicable taxes |
The processing fee is usually a percentage of the sanctioned loan amount and varies by lender. At L&T Finance, the processing fees for a Loan Against Property is up to 3% of sanctioned amount + applicable taxes.
Hidden charges may include processing fees, legal charges, and penalties for late payments. Reviewing the loan agreement helps avoid surprises.
Prepayment or foreclosure charges may apply, typically 2-5% of the outstanding amount.
Yes, higher loan amounts may attract lower processing fees as a percentage of the total loan.
Yes, stamp duty is applicable on loan agreements as per state laws, typically ranging from 1-3% of the property value.
No, processing fees are non-refundable as they cover administrative costs.
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