The Indian loan against property market is expected to scale heights at a CAGR of over 14% by FY2026. The demand for this financial product has increased owing to its substantial loan amount at an affordable interest rate with a longer repayment tenor. Borrowers can use the sanctioned amount towards a host of financial liabilities. However, borrowers must glance through the loan against property eligibility parameters before applying for it to avoid rejection.
Eligibility criteria of a loan against property
To reap the benefits of a loan against property, borrowers must meet the following eligibility criteria.
Eligibility criteria for salaried individual
- Borrowers must hail from India
- Applicants should fall in the age bracket of 23 to 62 years
- An individual must work in a reputed MNC or a public/ private company
- Salaried applicants must have work experience of 3 years
Eligibility criteria for a self-employed individual
- An individual must be an Indian citizen
- Applicants must belong in the age group of 25 to 70 years
- Individuals are required to show a steady source of income.
Furthermore, an applicant’s eligibility depends on the value of the mortgaged property and his/her credit score. A person applying for a loan against property must have a decent CIBIL score. However, it is imperative to note that the eligibility parameters differ from lender to lender.
Furthermore, borrowers can use the loan against property eligibility calculator to know whether they are eligible for availing of the loan option or not.
Besides knowing what is loan against property and its eligibility criteria, one should also know about the documentation required.
Documents required for availing loan against property
Here is a list of documents that a borrower must keep handy before applying for a property loan –
- Proof of identity (Aadhaar card, PAN card, Voter ID, Passport etc.)
- Proof of address (Passport, driving license, etc.)
- Bank account statements of the last three months (salaried individual)
- Bank statements of last six months (for self-employed)
- IT returns (for a salaried individual)
- Property documents like registration certificate, sales deed, property tax receipts, property insurance documents, title documents, etc.
- Salary slips of 3 months (salaried applicants)
Borrowers must note that this list of documents is indicative; lenders may ask for additional documents during loan processing.
Factors that affect loan against property eligibility criteria
Borrowers must know certain factors that affect home loan eligibility and apply accordingly to avoid rejection –
- Age of the applicant: A borrower’s age plays a vital role in determining the repayment capability of that individual. Lenders are generally sceptical about borrowers nearing the age of retirement. In such cases, lenders offer a loan amount with a short repayment tenor, resulting in higher EMIs.
- Income status of borrowers: Applicants must have a stable source of income as lenders are less likely to offer the loan amount to an individual who cannot show a proper income status. A stable income status determines the ability of a borrower to repay the loan amount without default.
- Credit score: Another major factor determining loan eligibility is the credit score. A credit score shows the creditworthiness of the borrower. A low credit score hampers one’s eligibility to avail of the desired loan amount. Borrowers must know how credit scores affect loan against property eligibility and then go ahead with the lending process.
- Insufficient property documents: The documents related to a property should be kept in order. Lenders will scrutinise these documents before approving a LAP loan amount. Any discrepancy in these papers will lead to a rejection of the loan application.
Borrowers must consider these factors before applying for a loan against property. It will help one make an informed decision and make the most out of the borrowing.
In addition, individuals can also check the pre-approved offers extended by renowned lending institutions on financial products like loans against property, home loans, etc. These offers expedite the lending process saving valuable time. Individuals can check their pre-approved offers by entering their names and contact details.
In conclusion, LAP is an effective financial solution to raise funds, which helps to manage big-ticket expenses. However, borrowers must meet the loan against property eligibility criteria to effectively avail of the benefits of this financial product.