Eligibility For Loans Against Property

Whether it is to achieve personal and professional goals or dealing with an emergency, a shortage of funds could arise at any moment and destabilise your financial condition.

In such circumstances, opting for a mortgage loan against a commercial or residential property seems like an ideal solution as it helps acquire substantial funds while retaining the ownership of the asset. 

While banks offer up to 60% of the property’s market price, one must meet specific eligibility criteria comprising the borrower’s income, age, credit score, etc., to obtain the loan without any hassle.

Read on to know more about the five factors which affect your eligibility for a loan against property.

Borrower’s age 

The candidate’s age is one of the critical attributes that play a significant role in obtaining a loan against property. It decides the borrower’s remaining years of service, which in turn determines their repayment capacity. 

If the borrower is a salaried individual, the age should not be more than 60 years, whereas self-employed professionals age must not exceed 65 years. In addition, if the borrower is about to reach their retirement age soon, it is suggested to add a co-applicant or guarantor in the loan application to avoid rejection.

Credit history

A CIBIL score is a three-digit number assigned by the credit reporting agencies, validating an individual’s debt-handling and repayment ability. The lenders pay a crucial emphasis on the credit score as it also determines the loan against the property interest rate to be accrued on the principal amount. 

Hence, one should maintain a healthy credit history by paying timely payments of outstanding dues such as credit card bills and loan EMIs. Additionally, one can improve the CIBIL score by checking their credit report regularly and reporting the errors for correction.

Job nature and stability

Along with age and credit score, the borrower should also maintain a steady source of income for getting the loan against property approved instantly. If the candidate is a salaried professional employed in a government institution or an MNC and avoids frequent job-hopping, it positively impacts the lender. 

It is crucial because the source of income helps ensure the lender about timely EMI payments. Hence, one should possess job stability to obtain a LAP quickly. 

Monthly income

While having a stable source of income is necessary, one should also earn a minimum salary to repay the loan EMIs regularly without compromising on their fixed monthly budget. 

The lenders usually confine a borrower’s EMI amount to 50% of his net income, and in case the monthly expenses exceed the limit, the loan application could be rejected. Thus, calculate the EMI amount based on the monthly earnings and take the necessary steps before applying for a LAP.

Property documents and insurance

Lastly, the borrower should keep all the documents related to the property, such as the title deeds, building plans, registration, etc., ready while availing LAP. 

In addition, one should also opt for mortgage insurance as it minimises the credit risk for the lender and helps in damage control in case of any unfortunate mishap. Therefore, having the property documents in order increases the odds of getting a LAP approval.