Availing funds in India has become more convenient than ever due to the availability of multiple secured and unsecured loan options. A loan against property or property loan can be one of the effective funding options as borrowers can utilise the approved funds without any spending constraints. Various lenders in the market extend such financial products at an affordable interest rate and flexible loan terms based on the borrower’s eligibility.
However, when applying for such credit, the financial lenders lay down certain property loan eligibility criteria for borrowers. Read along to learn about them in detail.
Eligibility parameters to apply for a loan against property
A property loan is granted against the mortgage of residential or commercial property. Moreover, such funding options come with numerous benefits that allow borrowers to fulfil their necessary financial requirements. Besides, such loans are offered to both salaried and self-employed individuals.
However, to avail of credit at an affordable interest rate and favourable terms, borrowers need to fulfil the following property loan eligibility criteria:
For salaried
- Applicants need to be within the age bracket of 28-58 years
- Must be an Indian resident
- Applicants must be employed in a reputed private or public organisation for at least 3 years
For self-employed
- Must be an Indian resident
- Applicants must be within the age bracket of 25-70 years
- One should have a business vintage of at least 5 years
Just like property loan eligibility criteria, the documentation requirement is also minimal. Here are some of the important documents that lenders require during the time of loan processing:
- KYC documents, such as PAN card, Voter ID, Passport, etc.
- Property-related documents, such as title deeds, property tax receipts, buyer agreements, etc.
- Business related documents
By meeting the aforementioned qualifying parameters and submitting the necessary documents, borrowers can negotiate with lenders for favourable property loan interest rates and terms. Other than this, borrowers can make use of loans against-property eligibility calculators to determine the amount they are eligible for and apply accordingly to avoid rejection.
Factors impacting loan against property eligibility
Following is the list of factors impacting loan against property eligibility:
- Borrower’s age
The applicant’s age plays a crucial role in determining his/her ability to repay debt. If the borrower has reached his/her retirement age, then there are high chances of loan rejection. In such a scenario, borrowers must try to opt for a loan with a shorter tenor, however leading to higher EMIs.
- Inadequate property documents
The property-related documents that need to be mortgaged should be in order. Such documents include building plans, approvals from certified authorities, title deeds etc. The lender needs to have assurance that the property possesses a clear title and is approved by authorities before extending the amount.
- No job stability
If the applicant is a professional, his/her job stability plays a crucial role in determining LAP eligibility. However, if the borrower has a tendency to switch jobs frequently, the loan application can get rejected.
- Poor credit history
A borrower’s CIBIL score plays a crucial role in determining one’s repayment capability. Ideally, lenders check the borrower’s CIBIL score and repayment record before approving the loan amount. Any delayed or default payment can significantly affect one’s credit history, thereby increasing the chances of loan rejection.
Apart from these factors, choosing a longer repayment tenor can result in lower EMIs. Therefore, if one has a modest income, he/she can always opt for an extended tenor, thereby increasing the chances of loan approval. However, one must always use a loan against property EMI calculator beforehand to determine the monthly obligations towards the loan to avoid any financial burden in the long run.
Eligible and existing borrowers can also enjoy the benefit of customised pre-approved offers available on a wide range of financing options, such as home loans, loans against property, etc. Such offers significantly reduce the hassle of extensive documentation and expedite the application process. Therefore, existing borrowers can check their pre-approved offers by mentioning their names and contact information.
Thus, applying for a loan against property is simple and transparent. Borrowers’ repayment potential will be assessed based on the aforementioned factors. However, the loan amount will depend on the property’s valuation, but one must also successfully meet the property loan eligibility criteria to avail of his/her desired amount at a reasonable interest rate.
Also Read: What is A Credit Card And How to Use Credit Cards Wisely?