A borrower owning an asset may apply for a loan against property from banks and housing finance companies. This kind of loan is a great way to get instant funds when compared to other forms of financing such as personal loans or gold loans. Before sanctioning the loan, the lender evaluates the loan against property eligibility factors of the applicant like age, nature of employment, income, bank statements, credit score, and value of the property. After meticulous assessment, the lender may accept or reject the loan application. Let’s understand these eligibility factors better so you can stay prepared.
Loan Against Property Eligibility Updated for 2021
- Age– Apnapaisa loan against property is readily available to borrowers if they own residential or commercial property. Age is an important factor considered by lenders. The minimum age limit to apply for a loan on property is 18-33 years, and the maximum age limit is 65-70 years. You can calculate the loan tenure and the quantum of monthly instalments using an EMI calculator for loan against property.
- Nature of employment– Both salaried and self-employed individuals are eligible for loan against property at lower interest rates.
- Loan to Value (LTV)– Banks and housing finance companies provide mortgage loan at an LTV of 40% – 80%. The LTV ratio varies with types of property.
- Loan against industrial property – up to 80%
- Loan against residential property- up to 70%
- Loan against commercial property – up to 80%
- Rate of interest– The rate of interest of loan against property varies with the type of properties—usually, the rate of interest for a loan on house range between 6.90%-11.55%. The mortgage loan rate is generally lower for residential properties, whereas the rate is higher for commercial properties.
- Property approval and documents– Loan against property eligibility depends upon the approval of the property by banks and the requisite documents. For calculating the loan against property eligibility, the borrowers need to submit registered sale deed, lease deed, past sale deed chain, approved building plan, latest house tax returns, etc.
- CIBIL Score– To be eligible for a mortgage loan, the borrowers must have a minimum credit score of 650. It is considered as the minimum cut-off score for loan against property eligibility.
- Loan tenure– The loan tenure is available for a maximum of 20 years.
- Net monthly income– Net monthly income of an individual is an important criterion to determine loan against property eligibility. The net monthly income of salaried co-applicants should be ₹40,000 or more. Similarly, the net annual income of self-employed individuals should be ₹3 lakh or more.
Loan Against Property Eligibility Tips to Improve Approvals
There are several factors that affect the eligibility of individuals for mortgage loan on home
- Apply Early – For loan against property eligibility, you must meet the age criteria. The above-mentioned age criteria determine your eligibility for the mortgage loan on home. If you are applying at an early age of around 25-35, you can avail a longer loan tenure.
- Income credentials – Just owning an asset is not the only criteria for loan against property online. Lenders also check your financial repayment capacity for repayment of the loan. Your credit score and income statements determine the repayment capacity of individuals. It is advised to clear off your existing debt such as credit card dues, personal or auto loans before applying for a loan on home.
- Valuation of the property – The quantum of the loan depends upon the current valuation of the property. The lenders do not consider the book value or the future value of the property. Depending upon the value of the property and loan against property eligibility, the lenders provide funds to borrowers. You can wait when the real estate prices are high to apply for the loan to get a higher loan amount.
- Credit score – The ideal CIBIL score of an individual should be 750+ for loan against property eligibility. The borrowers can check their credit score online and make efforts to improve their credit score before applying for loan against property.
- Work experience – Lenders also consider the job stability and work experience of the borrowers. The minimum work experience for a salaried individual is 3 years. For self-employed, the business should be in existence for a minimum for 5 years and provide ITR for 3 years.
Documents required for Loan Against Property Eligibility
The following documents are to be submitted by borrowers to be eligible for loan against property online
- Identity proof – Individuals need to submit their identity proof like PAN card, Aadhaar card, Voter ID card, etc., to be eligible for the loan.
- Address proof – Another vital document is address proof like passport, landline bill, voter id card, rent agreement, and driving license.
- Income proof – Bank statements and income statements are to be submitted by self-employed individuals. Last 3 years ITR, P/L account, and certified balance sheets by CA are also submitted by self-employed individuals. Form 16, bank statements, salary slips, and ITR forms are to be submitted by salaried individuals for loan against property.
- Office address – Individuals also submit ownership/lease/rent agreement/utility bill of their office if they are applying for loan against commercial property.
- Deeds – The property papers such as past sale deed, registered sale deed, and lease deed are submitted to the bank and housing finance companies for assessment.
- House tax papers – You are also required to submit house tax receipts and approved building plans from the municipal corporation.
The borrowers must be aware of the loan against property eligibility factors before applying for the loan. The eligibility factors and documents help borrowers to understand the process better and help in getting approvals faster.