Understanding Eligibility Criteria for Property Loans - Loan Trivia


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Tuesday 5 March 2024

Understanding Eligibility Criteria for Property Loans

Property loans are also known as mortgage loans or loans against property (LAP). Individuals who own a residential or commercial property can avail of a loan by pledging this property as security. The LTV ratio for such loans ranges from 50% to 75%. Property loan interest rates are low for the loan is backed by collateral. Borrowers also have the flexibility to choose their desired repayment tenor to help them keep EMIs affordable and easy to pay. The maximum loan tenor that one can opt for is 18 years. 

Loans against property funds come with zero end-use restrictions. Borrowers can use the money to invest in another property, put a child through college, start a business, etc. Further, property loan tax benefits can also help borrowers reduce their tax liability by a significant margin. In conclusion, if availed of after deliberate planning, property loans are an excellent financing option. However, the ability to avail of these loans is contingent on one meeting the property loan eligibility criteria. Below we discuss the loan against property eligibility criteria for both salaried and self-employed individuals. 

Loan Against Property Eligibility Criteria for Salaried and Self-Employed Individuals

  1. The loan applicant must be a residing citizen of India. 

  2. They must be the rightful owner of the property they plan to pledge as collateral. Further, they must have all the property papers in their name. 

  3. The age requirement for loans against property varies from lender to lender. However, most lenders require salaried applicants to be at least 25 years of age at the time of applying for the loan. Maximum age requirements also change from lender to lender. So, it is always best to check with your lender regarding the minimum and maximum age requirements.

  4. Lastly, the loan applicant must have a CIBIL score of at least 700. It is better if you apply with a CIBIL score of 750 and above as such a CIBIL score gives you high negotiating power concerning the loan against property loan terms and conditions. 

Before you begin your loan against a property loan application, make sure you meet all the eligibility requirements. Not meeting these eligibility requirements can lead to your loan application getting rejected. More importantly, use a loan against property eligibility calculator to calculate the loan amount you qualify for. The loan against property eligibility calculator is an online tool that loan applicants can use to calculate the loan amount they are eligible for based on factors, such as age, income, city of residence, current debt-to-income ratio, value of the property you plan to pledge as collateral, etc. Applying for a loan amount you are eligible for will not only enhance your property loan eligibility and chances of loan approval but also increase your ability to negotiate for better loan terms and conditions, such as a lower loan against property interest rate and loan tenor. 

Loans against property are one of the only few loan options that can give borrowers access to funds as high as Rs.10 Crore or higher. However, since these loans are backed by collateral, one must avail themselves of these loans after deliberate planning. The use of online planning tools, such as the loan against property EMI calculator and loan against property prepayment calculator, is highly recommended. 

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