India’s loan against property sector is anticipated to grow at a CAGR of 14% in terms of value and will touch $857.57 billion by the end of FY 2026. The reasons behind this humungous growth are the reduced interest rates, flexibility of fund usage and availability of high loan quantum.
If potential borrowers are contemplating such a financial product to meet their high-end expenses, it is imperative to know about the loan against property eligibility criteria and the factors impacting it.
Top factors affecting Loan Against Property Eligibility
Before knowing the factors impacting LAP eligibility, individuals need to learn about loan against property in detail. Just as the name suggests, this credit facility is extended by various financial institutions against collateralisation of a borrower’s owned property. The maximum amount of loan disbursement entirely depends on the market value of the mortgaged property.
However, certain loan against property eligibility criteria needs to be fulfilled to obtain this advance. Let’s take a look at the factors that can impact eligibility while borrowing this credit:
Almost every financial institution checks borrowers’ current employment status and their income every month when sanctioning any credit. Assessing borrowers’ monthly income will allow lenders to understand their capability to repay EMIs. Even when applying for a loan against property, monthly income plays a crucial role in sanctioning the amount.
Another criterion significantly impacting borrowers’ credibility of repaying the loan is how long they have been employed in the organisation, as changing jobs frequently can show the instability of one’s financial situation.
One of the essential factors that borrowers need to take care of while meeting loan against property eligibility criteria is the CIBIL score. Usually, financial lenders consider CIBIL score as a crucial parameter before sanctioning a LAP. It is difficult to get loan application approval with a poor credit score. Since credit score determines a borrower’s creditworthiness and reliability, one needs to maintain a healthy credit score and report to ensure quick approval.
Financial institutions follow certain rules when sanctioning a loan. There is a specific age factor when it comes to sanctioning a loan against property. It is a crucial parameter that confirms whether your loan application will be approve or not. When availing a mortgage loan from leading financiers, an applicant’s age must be 28 years for salaried individuals and for self-employed, it must be at least 25 years.
So, before knowing how to apply for loan against property, individuals need to take care of their age and apply accordingly to avoid application rejection.
Loan repayment tenor
Mortgage loans allow borrowers to obtain a longer tenor. Being a secured credit, lenders allow borrowers to choose an extended tenor of up to 20 years. The sanctioned amount relies on the amount that one has borrowed and his/her current income. Applicants with a considerable income can opt for a shorter tenor and a greater loan amount and vice versa.
In this regard, borrowers can take help from an online EMI calculator and understand all the calculations for a hassle-free loan against property online application.
If you want to acquire LAP, you must ensure producing authentic and valid documents. All the documents must be in order when pledging property with a respective financial institution. Documents, such as property registration papers, sales deeds etc., must be certified by relevant authorities. The authenticity of these documents will ensure whether the loan application should be approve or not. However, any invalid document or legal issues associated with the property can immediately reject a loan application.
Proper IT returns
Income tax returns can be consider a crucial component during the loan application. Submitting IT returns of past 3-4 years will substantiate that the borrower has a stable income for a considerable period. If IT returns are inadequate, it can significantly affect loan against property eligibility criteria.
Besides, eligible borrowers can also avail of pre-approved offers extended by reputed financial institutions on a wide range of secured and unsecured financial products. To reduce the hassle of extensive documentation and expedite loan applications, one can take the benefit of these offers. Therefore, check your pre-approved offer by mentioning your credentials.
This way, the loan against property eligibility criteria plays a crucial role in sanctioning one’s application for the credit form. Since this financial product involves a high-value asset as collateral, make sure not to borrow an amount exceeding the repayment capacity.