6 Factors that affect your Property Loan Eligibility

A sudden requirement of funds for a specific purpose, be it business or personal, should not be a cause of worry. With a variety of loan options available today, it is easy to get the funds that you need within a few days. Among others, a property loan is one of the easiest methods of getting your hands on funds if you are the owner of a property. A loan against property is a secure loan that can be availed of against a residential or commercial property at attractive interest rates and can be used for various needs. However, one must meet the property loan eligibility criteria before they can apply for such a loan. Let us first look at types of loans against property and we will then dissect the eligibility criteria for these loans in detail. 

Types of Loans Against Property

Based on Property Type

Loan Against Residential Property 

This is one of the most popular types of loan against property in India where individuals can avail of funds by leveraging their home or any other residential property owned by them which may be self-occupied, rented out, or lying vacant.

Loan Against Commercial Property  

Here a commercial property like an office space or an industrial unit is mortgaged to get funds against it at its market value.

Lease Rental Discounting  

In this a leased property is used as collateral for the loan. The rent earned can be used for loan EMI payment.

Based On Applicant’s Employment Type

Loan Against Property for Salaried Individuals – Salaried individuals aged between 25 and 70 years and employed with an MNC, or any public or private sector company are eligible for funds against their property. 

Loan Against Property for Self-Employed – Self-employed borrowers aged 25 to 70 years with stable income and business continuity of 5 years or more too can obtain an advance with Loan Against Property. 

Based on Usage

Based on usage, the loan against property types are divided as follows.

Loan Against Property for Debt Consolidation 

Combining all your existing debts into one with a loan against property for debt consolidation can help to reduce the total interest outgo and the hassle of managing multiple repayments.

Loan Against Property for Education 

Such loans can be used to cover higher education expenses like tuition fees and the cost of study materials. Borrowers can also use the funds to cover their travel expenses and accommodation costs, etc.

Loan Against Property for a Wedding 

The varied expenses of a wedding like catering, decoration and bridal makeup, etc. can all be handled with ease with a loan against property.

Loan Against Property Balance Transfer  

This allows borrowers to transfer existing debts to a new lender. By doing this, you can enjoy lower interest rates, top-up loans, quick processing fees, and nil foreclosure and prepayment charges.

Loan Against Property EMI Calculator

A Property loan calculator is an online tool provided by lenders that helps to calculate the monthly instalments to be paid towards the loan amount by a borrower. The LAP EMI calculator provides error-free results and provides a clearer picture of the EMI to the borrower before availing a loan against property.

Loan Against Property Eligibility Criteria

Credit Score

A credit score is an expression showing the credit history of the borrower. It reflects the credibility of a borrower and shows his loan repayment pattern. A CIBIL score above 750 enhances your eligibility for the loan. 

Employment Status

The employment status and job stability of a borrower is an important eligibility criterion for lenders. People switching jobs frequently appear risky and this may impact their loan eligibility negatively.

Source of Income

A steady and regular source of income ensures that the EMIs will be paid timely. Thus, this condition is a must for the fulfilment of loan eligibility. Proper and regular filing of ITR also enhances your loan against property eligibility.

Age of the Applicant

The lender here checks whether the applicant can complete the repayment of the loan before he/she reaches 60 years of age or retirement. Thus, applicants nearing retirement may face rejection as they do not match the eligibility criteria. 

Property Documents

All property papers like the title deeds, approvals from relevant authorities, building plans, and other documents are scanned and verified before sanctioning the loan to avoid any legal issues in the future.

Loan Tenor

For a short loan tenor, the EMI amount is higher, but the interest paid is lower. In a longer tenor, your EMIs will be spread over a longer period which will result in a smaller EMI amount.

Property Insurance

Apart from the mentioned factors, the property against which the loan is applied must be insured. An insured property instils a sense of security in the lender and enhances the borrower’s property loan eligibility for the loan.

How to Apply for Loan Against Property

  • Visit the official website of the lender of your choice.
  • Select your ‘Employment Type’ and ‘Loan Type’.
  • Enter details, such as your name, date of birth, mobile number, address, PIN code, PAN number, monthly salary, annual turnover, and property location.
  • Now submit the form and complete the loan against property application journey.

Summing Up

It is important to understand the factors that affect your loan against property eligibility to get your loan sanctioned easily and without too much effort. Thus, for any immediate need for funds property loan is a good option.