A loan against property is an easy financial solution to one’s many problems. Be it a wedding, a child’s education or your plans for business expansion, if you own a property, you can leverage it to get funds when you need it. A loan against property is a secured loan that can be availed of by pledging a commercial or residential property.
The funds availed of can be used for any purpose. The loan against property interest rates are quite attractive as compared to the other loans. However, rates of interest and the amount of loan that can be sanctioned depends to a great extent on the loan against property eligibility criteria fulfilled by the applicant. Here we shall discuss, the eligibility criteria for a loan against property.
Eligibility Criteria for Loan Against Property
Given below are some of the factors that influence the applicant’s eligibility criteria for a loan against property.
Age
The age of a borrower has a great impact on their ability to repay the loan. If the borrower has reached or will reach retirement age in the next few years, their loan application is likely to be rejected. In such cases, one can always look for loans with a shorter term, but this will result in higher EMIs.
In conclusion, a younger person is considered more eligible for a loan against property than a person who is nearing retirement.
Credit Score
Is the borrower capable of repaying the loan? This is an important question that lenders consider while sanctioning a loan. Thus, while approving a secured loan like a loan against property lenders check the credit score of the applicant.
A credit score is a three-digit number showing the credit history of the borrower. The financial credibility of a borrower depends to a great extent on this score and it reflects their debt repayment pattern. A CIBIL score of 750 or above enhances one’s eligibility for the loan.
Employment Status
Employment status and job stability of a borrower, whether salaried or self-employed, is another important factor for lenders. Job experience of 3 years in a private/public sector firm for salaried borrowers and more than 5 years of business experience for self-employed borrowers needs to be shown with a steady flow of income. Lenders see people switching jobs frequently as risky borrowers and this impacts their loan against property eligibility negatively. They may also be charged higher rates of interest for the same.
Source of Income
An applicant having a stable and sufficient source of income gives the lender confidence about their ability to repay the loan. The borrower can use the loan against property EMI calculator to check their loan EMIs in advance. If the loan EMI exceeds 60% of the borrower’s monthly income, the lender may reject the loan application.
Thus, the loan against property EMI calculator can help you calculate and know whether your source of income is enough and qualifies you for a loan against property. Regular and proper ITR filing also enhances your loan against property eligibility.
Property Documents
Before the loan against property is sanctioned, the lender will thoroughly scrutinize the property documents. The lender investigates all the documents to avoid any legal issues in the future. The property documents including the title deed, approvals from relevant authorities, building plans, and other documents are scanned and verified to look for any legal loopholes before sanctioning the loan.
Loan Tenor
For a short loan tenor, the EMI amount will be higher, but the interest paid on such loans will be lower. In a longer tenor, your EMIs will be spread over a longer period, which will result in a smaller EMI amount but increased total interest outgo.
To know your loan EMI in advance, use the loan against property EMI calculator. It helps you know what loan amount is right for you and the EMI given your income and loan tenor. You may not be considered eligible for the loan if your income is low and you want a large loan amount for a shorter duration, as it is high risk.
Property Insurance
Apart from the above-mentioned factors, the property against which the loan is applied must be insured. An insured property provides a sense of security to the lender and increases the property loan eligibility for the borrower. Thus, it is always good to pledge an insured property for a loan against property, as it enhances your eligibility for the loan.
Final Words
So, if you are looking for funds for any personal or business needs, you can opt for a loan against property. As these funds come with zero end-use restrictions, borrowers are free to use the money as they like. Keeping in mind the above eligibility factors can help you avail this type of loan with just a few clicks.
