PLEDGED YOUR HOUSE AS A LOAN COLLATERAL? CHECK THIS

For most Indians, a home is far more than a roof over their heads—it represents stability, security and aspiration.

- ANUJ SHARMA

With the expansion of housing finance across income segments, more families have begun leveraging their property as collateral for credit access. Though it can be empowering — unlocking lower interest rates and longer tenures—it carries a big risk: if repayments falter, the pledged home can be repossessed.

Safeguarding your asset needs more than optimism. It demands discipline, regulatory awareness and careful planning.

The Reserve Bank of India has long recognized that over-leveraging against property can be dangerous. To mitigate this, it enforces strict loan-to-value caps.

Bankscan lend up to 90% of the property value for loans of ₹30 lakh or less, 80% for ₹30-₹75 lakh, and 75% for above ₹75 lakh. Stamp duty and registration costs are excluded from this calculation, except for low-value units below ₹10 lakh.

This ensures borrowers always contribute equity, creating a crucial safety buffer. This means if your home is worth ₹50 lakh, you can expect financing of about ₹40 lakh at most. While this can feel burdensome for first-time buyers, the design is intentional: It prevents households from falling into the trap of excessive debt if property values stagnate or incomes decline.