What is the minimum amount that can be availed as loan against property?

by ritviksingh

A loan against property is a convenient credit option that extends substantial funds with flexibility of spending. Potential borrowers can avail the fund by fulfilling a simple loan against property eligibility criteria and documentation.

The RBI has kept the repo rate unchanged at 4% in October 2021. This data indicates the affordable interest applicable on the said credit form.

However, potential borrowers need to fulfil the loan against property eligibility required to avail considerable credit and added benefits. 

The general requirements are discussed below.

What are the eligibility parameters against LAP?

Individuals can gain substantial credit against a LAP. However, this factor is dependent on the mortgaged property’s value and an applicant’s credibility.

Ideally, lenders set the eligibility parameters to assess a borrower’s repayment capability. The common requirement includes-

  • A salaried employee should be working for an MNC, private or public firm
  • Self-employed individuals need to have a stable income flow
  • The age bracket for salaried individuals is 28 to 58 years
  • Self-employed applicants need to fall in the age group of 25 to 70 years

Fulfilling a loan against property eligibility criteria will aid a borrower to get instant approval, irrespective of the credit amount. 

Apart from the mentioned parameters, certain factors can impact loan eligibility significantly. Potential borrowers must try to improve their credibility and work on these factors to increase the chances of loan approval.

What are the factors that affect loan against property eligibility?

Here are some crucial factors which affect the loan against property eligibility of an individual. 

  • CIBIL score

Every applicant should keep a tab over their credit report. The factors like CIBIL score and repayment history influence LAP eligibility. 

Ideally, lenders check the credit report to assess an applicant’s reliability and repayment capability. They consider individuals with a 750+ CIBIL score ideal for loan approval. 

These borrowers are likely to gain affordable loan against property interest rates and better repayment terms. 

Potential borrowers should try improving their eligibility by practicing certain habits such as making timely repayments, limiting credit inquiries, clearing existing debts, etc.

  • Applicant’s age

An applicant’s age also falls in the loan against property eligibility criteria. Typically, lending institutions prefer young borrowers due to their repayment capability and workable years.

In this regard, aged individuals can disclose their additional income source to substantiate their repayment capability. Here income sources refer to earnings from rent, savings, etc.

Again, this will help them gain substantial loan against property to make big-ticket expenses such as medical emergencies, children’s education, etc.

  • Employment profile

Lending institutions scrutinise an individual’s employment profile before making loan approval. Maintaining a stable income flow will aid an applicant in substantiating their repayment capability. It increases the chances of loan approval.

However, individuals who keep switching their job profiles have lesser chances of loan against property approval.

A lender will also verify an applicant’s employment tenor and educational qualification during the hard inquiry. Hence, it is essential to provide correct and relevant details.

  • Income stability

It is imperative to know that an applicant’s income profile helps decide a loan against property eligibility. Individuals showing financial security and income stability have the highest chances of loan approval.

Moreover, maintaining a 40% or below credit to income ratio improves eligibility. These applicants can convince lenders to levy affordable terms and are likely to receive customised offers. 

For instance, reputed HFCs extend pre-approved offers to credible borrowers. These offers make the application process hassle-free. Such offers are available on financial products like loan against property, home loans, etc. Check your pre-approved offers by entering your name and contact number.

  • Authentic property documents

An applicant needs to submit valid documents to avail a sizeable LAP and leverage the mortgaged property’s equity. These papers will substantiate the property ownership and aid in valuation.

Ideally, an individual must submit registration papers, a title deed, tax clearance bills, etc. A lender will scrutinise the authenticity of these documents before disbursing the amount.

Apart from the mentioned factors, individuals should also check whether their property is insured. Lenders extend high loan value against an insured property kept as collateral.

Potential borrowers can thus gain substantial funds against a LAP. However, to avail the credit form, they need to fulfil certain loan against property eligibility criteria.  Additionally, applicants can practice ways to improve their eligibility, such as improving their credit score.

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