Loan Against Property

What is the Criteria for Obtaining Loan Against Your Property?

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Need money to study abroad, expand a business, or organize an upcoming wedding? Did you know that the property you already own can help obtain the required funds? A LAP enables a property owner to pledge the property as collateral and get money against it. Reputed lenders offer as much as 70% of the property’s market value as a loan. Owing to its lower interest rate and longer repayment tenure, this loan type has become a popular form of lending in India.

Property owners no longer need to worry about finances. Know the criteria for obtaining a loan against property and get the required funds at minimal interest rates.

Determine the Property Type

A property owner may take LAP against a commercial, industrial, or residential property. The eligibility may differ depending on whether the property is self-occupied, rented, or vacant. It can be an individual home, flat, or apartment for residential property. Commercial property can be a shop, mall, office building, or complex. LAP is also available against a plot of land parcel. One condition is that the property should be freehold and the title clear.

Calculating LAP Eligibility

The lenders determine an applicant’s LAP eligibility based on their income, debt-to-income ratio, credit score, location, job profile, and others. The property’s market value also plays a crucial role in determining the loan amount. Use a mortgage loan calculator to calculate what loan amount is available for borrowing. Enter the property’s market value, monthly income, monthly obligations, interest rate, and repayment tenure. The intelligent tool will automatically display the maximum loan amount, EMI amount, and interest payable on the screen.

Depending on the NBFC’s policy, the LAP amount may be up to 70% of the pledged property’s value. For instance, if the property is worth ₹ 1 crore, they may lend up to ₹ 70 lakhs as a loan against the property. However, they will use multiple evaluators to examine the property’s age, condition, and worth. The applicant’s financial condition is another crucial factor determining the loan amount. Besides the property’s value, the applicant’s age, credit score, DTI ratio, income stability, and employment determine their eligibility.

LAP eligibility criteria differ for varying applicants. These are:

  • Eligibility Criteria for Salaried Employees: A salaried employee from 21 to 60 years of age is eligible to apply for LAP. They must be resident citizens of India working in a private company, public sector, or multinational company with regular income. Besides these, they must have a CIBIL score of 700 or above.
  • Eligibility Criteria for Self-Employed Professionals: A self-employed professional with a regular and steady income may apply for LAP. They must be resident citizens of India between 25 and 65 years of age. CIBIL score of 700 and above is another requirement they must fulfill.
  • Eligibility Criteria for an SME: An Indian SME may apply for a LAP if it has a business vintage of a minimum of 2 years. It must provide CA audited financials, showing steady profits for the last two years.

Documentation Requirements for Loan Against Property

Since LAP is a secured loan, documents play a significant role in its eligibility criteria. Different types of individuals need to furnish various documents. These include the following:

  • For Salaried Employees: KYC documents, income tax returns for the last two years, Form 16, salary slips, last six months’ bank statements, and pledged property documents
  • For Self-Employed Professionals: KYC documents, income tax returns for the last two years, Form 16, and last six months’ bank statements, and pledged property documents
  • For SME: KYC documents, Form 16, last six months’ bank statements and income statements, last two years’ ITR with audited income summary, cashflow percentage supporting the loan amount, and pledged property documents

Stepwise Procedure to Apply for a Loan Against Property

Follow these steps to apply for LAP:

  • Visit the lender’s website and apply for LAP
  • Select whether you want LAP for an SME, self-employed professional, or salaried employee
  • Enter the required details and double-check for accuracy
  • Provide an email address and mobile number for future communication
  • Accept the terms and conditions
  • A customer representative will get in touch for the next steps

The criteria to obtain a loan against property differ for SMEs, self-employed individuals, and salaried employees. The lenders determine an applicant’s eligibility based on their age, income, nature of work, credit history, fixed obligations, and pledged property’s value. When you require a large number of funds quickly, understand the loan criteria, use a mortgage loan calculator to know eligibility, and apply for LAP to get the value locked in your property. However, ensure its timely repayment, failing which you may lose your asset and regret it.

Must Read: Know How Can Bajaj Housing Finance Home Loan Calculator Help You Plan Your Finances Better

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