What are the Criteria for Obtaining a Loan Against Property?

India’s loan against the property market is expected to grow at a CAGR of 14% in value terms by FY2026. This signifies that more potential borrowers consider availing of this financial product to meet their financial requirements. Besides, it is imperative to know the eligibility criteria for a property loan and the factors affecting them.

The following sections provide a detailed discussion of the essential eligibility criteria for a loan against property.

Eligibility criteria for a loan against property

Following is the list of eligibility criteria potential borrowers must fulfil to avail the benefits of a loan against property:

  1. Applicants must hold Indian citizenship.
  2. Salaried applicants’ age must range between 28 to 58 years.
  3. Self-employed applicants’ age must range between 25 to 70 years.
  4. Salaried applicants must have a minimum work experience of atleast 3 years at a public, MNC, or private firm.
  5. Self-employed applicants must showcase a steady income for 5 years or more. 

Besides meeting these parameters, one needs to submit the lists of documents to complete the application process, you can read more about the eligibility criteria for loan against property through Bajaj Housing Finance.

Documents required for loan against property

Here are some of the essential documents needed by the majority of lenders at the time of loan processing. These common documents are:

  • Identity proof- Passport, Voter’s ID, PAN card, Driving License.
  • Property-related documents- Property tax receipts, title deed, buyer agreement, etc.
  • Income proof- Income tax returns, bank account statements, etc.
  • Other documents- These documents are related to the declared ventures and businesses (applicable for self-employed applicants).

These parameters may vary according to lenders, keeping the basic criteria almost same.

Factors affecting the eligibility criteria for a property loan 

There is a number of factors that affects the loan amount one can borrow:

  • Employment status

Loan disbursement is significantly influenced by employment status and job stability for both salaried and self-employed borrowers. Lenders determine borrowers’ repayment capacity by considering the number of years one is associated with a company. Therefore if a borrower is a professional, job stability plays a significant role in a loan against property.

Consequently, if a borrower frequently switches jobs, the possibility of a loan application for that individual is relatively higher. 

  • Applicant’s age

It is another aspect that lenders consider before sanctioning a loan against property. For instance, if a borrower is retired or on the verge of retirement, the chances of loan approval are quite low.

However, in such a case, one can always try for loans with a shorter repayment tenor. A short tenor can help reduce the total interest burden, nevertheless, it increases the EMIs. One should take the help of a loan against property EMI calculator to get a clear idea about the repayment.

  • CIBIL score

It is the three-digit number authorised by the credit bureau against an individual’s financial borrowing and repayment activity. In short, it indicates how efficiently an individual repays his/her existing debts. So before applying for a LAP, ensure to maintain a good CIBIL score. 

Any late or default payment can negatively affect the credit score, which may hamper the hassle-free loan application process. 

  • Insurance of the property

If the property highlights legitimate insurance, borrowers get an edge in the loan application. It is because it lowers the risk of a lender as they are aware that this property will not become an NPA (non-performing asset) in the future.

In addition, meeting loan eligibility parameters also facilitates other benefits for existing borrowers. For instance, reputed lenders extend pre-approved offers that simplify the application process. Customers can check their pre-approved offers online by entering their names and contact details.

Therefore, after thoroughly anticipating the factors that affect the eligibility criteria for a property loan, one should move ahead with the application procedure.

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