All you Need to Know About Loan Against Property Eligibility Calculation
As per a report, Loan Against Property the value of non-performing assets (NPA) in the Indian financial market stood at a whopping Rs.1.8 trillion. While it indicates funds of high-value stuck due to non- repayment, it also indicates the borrower’s ineligibility, which results in such default.
In this regard, the number of defaulters in loan against property segment is comparatively high despite it being a secured advance with multiple borrower-friendly features. As these are high-value advances repayable over the long term, the mismanagement of finances can lead to a debt trap with no suitable recourse to repayment. For this reason, loan against property eligibility constitutes a crucial role in the entire loan approval process.
What are the eligibility criteria for loan against property?
Loan against property (LAP) can prove to be a saviour during financial crunches for its capacity to generate high-value financing. Also known as a property loan, this borrowing option allows individuals to apply for a high loan quantum via property mortgage. However, it does not mean that there is no risk factor on the part of lenders. Borrowers still need to make timely repayments of the advance over the predetermined tenor.
Since these loans come with a long-term repayment liability, it is apparent that as a precautionary measure, almost all lending agencies duly assess the loan against property eligibility of a borrower before approving the advance.
Following are some of the factors that determine the eligibility for a loan against property.
For salaried individuals
- The applicant must age between 33 and 58 years
- Borrowers should be the resident of India
- The applicant should be employed with any public sector, private company or MNC
For self-employed individuals
Individuals with the following loan against property eligibility requirements improve their chances of availing a loan with minimum hassle.
- The borrower must be between the age of 25 and 70 years
- They should be self-employed with a steady source of income
- Applicants need to be the residents of India
These are some of the loan against property eligibility that one must possess to acquire a loan against property. However, it also varies with different lenders and the borrower’s location. For that, the borrowers need to contact their proffered lender for specific criteria.
Proper documentation is also a significant component of the loan approval process. Following is the documents checklist that one needs to submit along with the application form to the lender.
- Aadhaar card/PAN card
- Address proof
- A copy of the documents of the mortgaged property
- Bank account details (previous 3 months for salaried and 6 months for self-employed applicants)
- Salary slip and IT return (for salaried borrowers)
Along with this, applicants must also consider a few things that can help improve their eligibility.
Some useful tips to improve eligibility for property loans
- Credit score improvement
A credit score is one of the significant factors to consider while taking a loan against property. Since this score reflects your creditworthiness, you must possess a score of 750+ for hassle-free approval. You must, therefore, take necessary measures for its improvement like timely payment of dues, maintaining ideal credit utilisation ratio, etc.
- Document other income sources
Apart from providing the net income from salary or business, applicants should also mention any other source of income for an improved repayment capacity and to receive approval for high loan value.
- Property to be mortgaged
Loan against property eligibility also depends on the value of the property you are mortgaging. Higher the valuation of a property to be mortgaged; higher will be the sanctioned mortgage loan amount.
- Debt-to-income ratio
Applicants can also maintain a low debt-to-income ratio to improve their repayment capacity and receive quick approval.
Along with this, you can also use online loan against property eligibility calculator to determine the eligibility, and apply accordingly. Further, plan your repayments by utilising a property loan EMI calculator which helps you estimate the EMIs payable as per the LAP loan interest rate, loan amount and tenor opted for.
Top lending institutions offer loan against property at competitive interest rates and flexible tenor. They also extend pre-approved offers on different financial products, including loans against property and home loans. These offers make the entire loan approval process swift and effortless. You can check your pre-approved offer by providing your name and contact number.
Nonetheless, besides calculating eligibility, you should also gain an idea about how can you avail tax benefits on your LAP. It will help you save a substantial amount each year and help maximise the benefits derived from your loan against property.