A loan against property is one of the easiest ways to access extra funds. The demand for property loans has increased with time, as these loans are more affordable than any other type of personal loan. Further, you can use the fund availed of to expand your business venture, meet any unforeseen medical expenses or meet other personal requirements.
Read on to find more about loan against property and how much loan value are you eligible for.
What Is a Loan against property?
A Loan against property is a secured credit option where you keep your property as collateral. You can keep your home, land or any commercial property as security with the lender. Your loan amount is sanctioned after verification.
Details of Loan against property Eligibility
What Is Property Loan Eligibility?
To ensure that every borrower can repay the loan amount efficiently, the lenders set eligibility criteria. Every borrower has to meet the criteria, failing which the lender can reject the loan request. Thus, while taking loan against property, one must always check the eligibility criteria.
For Salaried Applicants:
- Nationality: Must be an Indian
- Age: 28 to 60 years
- Employment: At least three years of work experience, preferably with any respected employer, is mandatory
- Income: Depending on residential city and age, between Rs. 30,000 to Rs. 50,000.
For Professional Applicants:
Same as above, except the age and employment criteria. The age must be between 25 to 70 years, and five years of experience in the current undertaking.
Net salary is important to forecast the borrower’s repayment capacity. Lenders only consider your in-hand salary and deduct gratuity, EFI, etc. This take-home salary determines your EMI amount and, consequently, your total loan amount. Your in-hand salary can include basic salary, house rent allowances, medical allowance, etc.
Age is also crucial to determine the loan tenor.
Calculate Your Eligibility for a Loan against property
Eligibility calculation depends on a mathematical formula. You can use a loan against property calculator to get an estimate of your loan obligations. Simply fill in the following relevant details to calculate eligibility:
- Date of birth
- Net monthly salary
- Other monthly incomes (if any)
- Current EMIs (if any)
Please make sure that you provide accurate details to get a correct estimate. This calculator will instantly display the maximum loan amount you are eligible to borrow.
How Much Property Loan Can I Get?
The amount availed of under LAP depends primarily on the value of the property. Most lenders agree to sanction loans up to Rs.5 Crore or even higher, basis eligibility. However, if you need a high-value loan under LAP, you will have to prove your repayment capacity to your borrower. Further, you must also pledge a high-value property to avail of a high-value loan.
Before you apply for a loan against property, it is advised to check the documents required. Most lenders will ask for the following documents:
- Latest salary slip of the three months, bank statement for six months, ITR for two years for financial verification
- Pan card/Adhaar Card/Utility bills for address verification.
- TAX receipt, agreement copy, approved project plan, etc. for verification of property
Increase Your Loan Eligibility
Increasing your loan against property eligibility ensures your chances of loan sanction at a favourable tenor and affordable rates. Given below are some ways to increase your eligibility:
- Clear due loans: Clearing your loans will help you build a better credit score. Having some investments and savings further increases your eligibility.
- Improve credit score: Having a good credit score above 750 or 800 increases your chances of loan sanction. A better credit score indicates a better capacity for repayment.
- Joint application: Joint application with a family member increases your loan affordability and enhances your loan opportunity. You can add your spouse or any other family member as a co-applicant.
- Prove your additional income sources: If you have any additional income source, declaring it will boost home loan eligibility. It indicates higher income and better repayment chances.
Loan against property are a smart way to fund your additional expenses, be it your dream wedding, home renovation, or your child’s higher education. These loans come with zero end-use restrictions and can help you meet all kinds of financial emergencies.