How to Enhance Your Loan Against Property Eligibility

Want to start a new business or need funds urgently for your child’s higher education? Stop worrying right there! If you have a property lying vacant, you can take a loan against it and use the funds to start a business, buy another property or take care of any financial emergency. You can even take a loan against the property you are staying in, provided you are the rightful owner of the property. Loans against property draw low interest rates and therefore, have become a popular means of arranging funds during a financial emergency. However, the interest rate and the sanction of loan also depend on the loan against property eligibility criteria fulfilled by the borrower. 

What is Loan Against Property?

A loan against property refers to the amount you can borrow against your property. Such loans can be availed of by leveraging a commercial or residential property that is rented, self-occupied or vacant. Since these are high-valued secure loans and have low risk, they draw lower rates of interest. Default in loan repayment here can lead to the property being auctioned off by the lender to get back the funds.

Loan Against Property Eligibility Criteria

When an individual applies for a loan against property, the lender first takes into account the eligibility of the applicant. Some common factors that the lender takes into consideration while evaluating the eligibility of the applicant are his/her age, nature of employment, income and property value. Based on these factors, the lender approves or rejects the loan against property application of the individual. Let us discuss these eligibility criteria in details:

Credit Score

It is an important criterion that lenders consider while checking the borrower’s eligibility for any type of loan. Before approving the loan against property application, lenders check the applicant’s credit score. CIBIL or credit score is a numeric expression defining the applicant’s past loan/debt repayment history. A borrower’s creditworthiness depends on this score and shows their loan repayment pattern. A CIBIL score of 750+ enhances your eligibility for the loan.

Employment Status

Employment status and job stability for both salaried and self-employed individuals are important eligibility criteria for sanctioning a loan by lenders. The number of years of association with the organization and the salary of the applicant is also important. A minimum work experience of 3 years in private/public sector firm (for salaried borrowers) and more than 5 years of business experience having a steady income (for self-employed borrowers) needs to be shown to prove eligibility for the property loan.

Source of Income

A stable and sufficient source of income is important for a lender to sanction an application for a loan. An applicant should have a steady and stable monthly income, which enhances his loan repayment credibility in the eyes of the lender. A loan EMI exceeding 60% of the monthly income of the borrower can lead to the rejection of the loan application. Thus, the source of income is an important eligibility criterion for a loan against property.

Age of the Applicant

Another important eligibility criterion is that the applicant must be an Indian resident with the age bracket for eligibility as follows:

  • Salaried applicants’ age must lie between 23 years and 62** years 
  • Self-employed applicants’ age should be between 25 years and 70** years 

** The maximum age is the age considered at the time of loan maturity.

Documents Required

Documents required for loan against property are:

  • Proof of identity: Aadhaar card/PAN card/Passport/Voter’s ID/Driving license
  • Proof of Address of the applicant like electricity bills, Phone bills, etc
  • The applicant’s pay slip for the last 3 months
  • Last 6 months’ bank statement 
  • Income Tax Returns proof
  • Property Documents – Buyer agreement/original title deed/property tax receipts, etc.

Additional documents may also be required at times. Your lender will communicate these requirements to you.

Loan Tenor

For a short loan tenor, the EMI amount will be higher. In a longer tenor, your EMIs will be spread over a longer period which may result in a smaller EMI amount. The loan against property EMI calculator can help you plan your finances. In case of lower income and shorter loan tenor, the loan application may be rejected as the EMI amount may be too high.

Property Insurance

Apart from the above factors, the property against which the loan is applied should be insured. An insured property instils a sense of security against the property and boosts the property loan eligibility criteria leading to quick sanction of the loan.

What is a Loan Against Property Eligibility Calculator?

The loan against property eligibility calculator is an online tool that helps an applicant to figure out whether they are eligible for a loan against property. After checking the eligibility with the help of this tool, the applicant can decide whether they should consider applying for a loan against property.

Summing Up

Thus, we can see that a loan against property is a comparatively easier and smarter way to avail of large amounts of funds for business or personal use during an emergency. Before applying for a loan against the property it is best to know all the eligibility criteria for it so that the loan application gets approved by the lenders without any hiccups. So, whenever you apply for a loan against property, make sure you are fulfilling all the eligibility criteria as mentioned above, for quicker loan approval. Being disciplined while repaying debts can help you achieve easier credits in times of emergency.

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