Disclaimer
This content is for educational purposes only and was last updated on July 2025. Rates as well as bank policies are subject to change. This is not financial advice. Please seek the advice of a professional and directly contact the banks to ensure the accuracy of all information before making any investment property loans in india decisions .
Introduction: The Investor’s Dilemma
Yet again, real estate continues to be one of India’s most preferred instruments for wealth creation. Whether in pursuit of rental income, long-term appreciation or diversification, investment properties are becoming more and more sought after.
But there is always a smartly chosen loan behind every great property investment. With high-value EMIs, differences in interest rates, and hidden fees at every corner, the wrong investment property loan can have that ‘cash cow’ generating a financial noose around your neck in no time.
This guide cuts through the confusion. We will assist you to compare, analyze and select the best investment property loan in India that suits your investment objectives with confidence.
Home Loan vs Investment Property Loan: Understand the Difference
Interest Rates & LTV Ratio
Investment property loans generally carry higher interest rates than loans on a primary residence. The Loan-to-Value (LTV) ratio is also lower — around 75-80%, so you will have to make a bigger down payment.
Tax Implications
Tax benefits differ too:
- Home Loans for Self-occupied property are eligible for deductions under Section 80C and Section 24.
- The cap on deduction of interest is ₹2 lakh for second property, especially if let out, for set-off against other income.
📌 Note: Always refer to a Chartered Accountant (CA) in your case.
The Ultimate Checklist: 7 Criteria for Comparison
1. Interest Rates: Fixed vs. Floating
The larger part of Indian property loans is now floating rate, and is linked to external benchmarks such as the RBI’s repo rate. In a cutting rate regime of RBI, this could result in lower rates, but with higher EMIs in times of inflationary periods.
2. Loan-to-Value (LTV) Ratio
LTV ratios for investment properties are typically 75-80%. So, for a property worth ₹1 crore, you need to plonk down ₹20-25 lakh.
3. Processing Fees and Hidden Charges
Always consider the true cost of borrowing:
- Processing Fee (0.5% – 2%)
- Legal Charges
- Valuation/Technical Charges
- Stamp Duty on loan agreement
4. Loan Tenure
- Higher tenures = Smaller EMIs but more interest paid in total.
- Higher EMIs but quicker repayment and lower total interest if tenure is short.
5. Prepayment/Foreclosure Rules
- For floating rate loans, no prepayment charges (according to RBI mandate).
- In case of fixed-rate loans or NBFCs, there can be prepayment penalties.
6. Borrower Eligibility & Your CIBIL Score
A good credit score (preferably CIBIL score 750+) is instrumental to getting the best rates.
Income stability, type of employment and age are also considered by lenders.
7. Top-Up Loan Facility
There are some lenders who provide additional loans for renovation or furnishing, which is generally offered at the same rate of your main loan.
Best Banks & NBFCs for Investment Property Loans in India (2025 Comparison)
| Bank/NBFC Name | Interest Rate Range (p.a.) | Max LTV Ratio | Key Feature |
|---|---|---|---|
| SBI | 8.35% – 9.50% | ~80% | Low rates, wide branch network |
| HDFC Ltd. | 8.50% – 9.70% | ~80% | Real estate loan expertise |
| ICICI Bank | 8.75% – 10.00% | ~75% | Fast processing, digital platforms |
| Axis Bank | 8.65% – 9.90% | ~75% | Good for salaried professionals |
| LIC Housing Finance | 8.60% – 9.80% | ~75% | Excellent offers for LIC policyholders |
| Bajaj Finserv | 9.00% – 11.50% | ~70-75% | Fast disbursal, relaxed eligibility |
📝 Note: Rates above are examples based on July 2025 data and vary depending on the borrowers’ credit profile, property location, and loan type. Click a bank below to see today’s best rate on their website. Always compare home loan interest rates before choosing the best loan.
Your Step-by-Step Application Guide
Step 1: Verify Your CIBIL Score
Check where you stand using the official CIBIL portal or an authorised credit score partner.
Step 2: Gather Your Document Weapons
- PAN Card & Aadhaar (Proof of Identity)
- Utility Bill/Passport (Proof of Address)
- 3-6 Months Salary Slips or Form 16 (in case of salaried)
- Last 3 IT Returns + P&L Statement (in case you are in business)
- Last 6 Months Bank Statements
- Property Papers: Sale Agreement, Title Deed, No-Encumbrance Certificate
Step 3: Compare & Apply
STUDY CHART Comparison Chart from listing above in this article. Find a lender that fits with your financial goals and risk tolerance.
Step 4: Sanction & Verification
The lender checks whether you are eligible, notarial, income and source of funds investigation, and property status investigation are conducted through field investigation, legal review and technical assessment.
Step 5: Disbursement and Signing of Agreement
Sign the loan agreement and the payment realization process will start as per the property payment schedule.
Conclusion & Final Wisdom
There’s no such thing as the “perfect” investment property loan—there’s only what will fit best with your overall financial goals.
A great loan that enables your investment goals with the least amount of stress that is needed. A bad one will scupper your ROI with high EMI or shoddy services.
“You’re not just a borrower if you’re starting with this guide. You’re a smart money, strategic investor.”
Call to Action
💬 Have you recently tried to do a property loan? Feel free to share your experience or ask questions in the comments section below!
Author Bio
Md Irfan is a finance writer who has years of experience writing for multiple domains in finance sector. He supports first-time buyers and real estate investors with their finances through down-to-earth content and personalised wealth strategies.
🔗 Visit globe finance hub | Groww
Final Disclaimer
This content is for informational purposes only and does not form part of any financial advice. Always check with banks or licensed financial advisors to confirm any information about a loan amounts before you apply for any loan product.