A loan against property is a popular method of gathering a large sum of financing to tackle any expense that you come across. A big ticket expense cannot always be solved with the help of your savings, and this is when your property can help you. A secured loan, like a loan against property, requires you to pledge your existing commercial or residential property with a lender as collateral, and on the basis of this collateral, your loan is sanctioned. The interest rates for a loan against property are relatively lower when compared to other forms of unsecured loans, and the tenor is usually long-term, ranging between 20 and 25 years.
What are the eligibility criteria for a loan against property?
When you apply for a loan against property, you must understand that there are a certain set of eligibility criteria you need to fulfil and your application is processed on the basis of your eligibility criteria as well.
Here are the factors that affect the eligibility criteria for a loan against property:
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Applicants Age:
Your age is one of the most important factors that the lender will consider when processing your loan application. A lender is looking for candidates that are young and early in their careers so they are able to maintain their source of income and will have the ability to pay the loan against property EMI regularly for the duration of the tenor. An applicant who has crossed their retirement age can still be approved for a loan against property, but the interest rates will be much higher and the sanctioned tenor will be much shorter.
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Applicant’s Income:
When you apply for a loan against property, you need to submit your income proof, such as the latest pay slips, and your financial details to ensure that you are financially capable of paying your monthly instalments without defaulting.
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Credit Score:
In India, your credit score is also known as the CIBIL score and is arguably the most important factor you need to consider before even applying for a loan. Your CIBIL keeps track of your financial record. If you have an existing loan, credit card dues, or if you have defaulted on your EMIs, etc., these are all reflected against your CIBIL score number. It is important that you maintain a healthy CIBIL score of 750 or higher because this will ensure the lender that you are a creditworthy candidate who is capable of repaying their loans without defaulting. A high CIBIL score offers you low-interest rates and better lending terms.
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Nature of Employment:
Anyone can apply for a loan against property, but the process of property loan eligibility criteria for a self-employed individual and a salaried individual are completely different.
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Property Valuation:
Your property market valuation plays a deciding factor in the amount of loan that you can avail. A loan against property operates on the basis of a loan-to-value (LTV) ratio, and this LTV is calculated against your property’s current market value. A lender will generally sanction anywhere between 50-70%, but that solely depends on your property. A property that is situated in the desired locality, is not very old and is well maintained will help you fetch a higher valuation and even a lower interest rate. Residential properties will always fetch a higher LTV in comparison to commercial properties due to their resale value.
What are the documents required for a loan against property?
Here is the list of documents you will need to submit when applying for a loan against property:
- Identification Proof – Aadhaar Card, Pan Card, Passport, Voter ID Card.
- Proof of Income – Salary Slip, Banking Statements
- Address Proof – Electricity Bill, Driving Licenses, Passport, Property Tax receipts
- Form 16
- Property Documents – Sale Deed, Registration Certificate, Lease Agreement, Property Insurance etc.
Please note that when you are asked to submit these documents you must ensure that all the documents are legitimate and complete because submitting documents with a few missing will only delay your loan application process and in turn delay your loan disbursal.
Submitting any fraudulent documents will lead to an immediate rejection of your loan application and the lender may even proceed with criminal charges.
What is a loan against property EMI calculator?
Before you apply for a loan against property you must approach different lenders to establish the current market trend and what each lender has to offer in regards to their loan against property offers and lending terms. A loan against property EMI calculator will help you establish your loan feasibility.
A loan against property EMI calculator is easy to use and provides you with immediate results. Here is how you can use a loan against property EMI calculator:
Step 1: Select any loan against property EMI calculator available online and visit their website
Step 2: Enter the details required by the calculator such as:
- Enter your principal loan amount
- Enter your interest rate
- Enter the tenor period
Step 3: Click on Submit
Step 4: Once you submit these details the calculator will display the monthly instalment, total interest payable and the total loan amount.
The benefits of a loan against property EMI calculator are as follows:
- A loan against property EMI calculator is easy to use
- You are able to compare the offers from multiple different lenders which will help in making an informed decision
- A loan against property EMI calculator works on the basics of an algorithm so it is able to provide you with maximum accuracy every time and is quick to deliver results.
