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Top Factors That Affect Your Loan Against Property Eligibility

Loan Against Property Eligibility

Top Factors That Affect Your Loan Against Property Eligibility

Introduction

Loans are the best medium to fulfil all your dreams. In India, loans are as diverse as the needs of the borrowers. Home loan, construction loan, property loan, land loan – you name it, and an Indian lender has it in their loan portfolio.

A loan against property is a favourite with borrowers because of the following reasons:

  1. The loan approval process is fast.
  2. The eligibility criteria of a loan against property are uncomplicated.
  3. The loan amount can be higher than many other types of loans.
  4. You may claim tax deductions on interest repayment.
  5. The repayment tenure can be as high as 20 years.
  6. Some reputed lenders impose no penalty on prepayment of principal and interest.
  7. Loan against property interest rate is generally lower than many other types of loans.

This article provides you with the top-3 things you need to keep in mind to meet the eligibility criteria of loans against property.

The Top-3 Factors That You Need to Keep in Mind

1) Repayment Capability

The process of applying for a loan against property is simple. You need to compare a few lenders, choose the lender who is offering you the best interest rate, submit a few documents, keep your property ready for inspection, and get the loan amount in your bank account.

However, your ability to repay the loan plays a primary role during the sanctioning of the loan. A few factors that lenders evaluate are:

  1. Net monthly income.
  2. Gross monthly liabilities.
  3. Stability of income.
  4. Debt to income ratio.
  5. Nature of employment.

Your ability to repay the loan determines your loan against property repayment tenure and interest rates.

2) Ownership of the Property

One of the most important eligibility criteria for a loan against property is the ownership rights to the property. You can avail of a loan against property only if you have ownership right to a residential or commercial property that you wish to mortgage.

If the property has a joint-ownership, then you may show the joint owner as a co-borrower. Doing so will reduce your EMI liability.

3) Miscellaneous Factors

A few other factors that are as important as the previous ones are as follows:

a) Borrower’s Age

The age of the borrower should not cross 60 (if salaried) and 65 (if self-employed), on the date of loan maturity.

b) Credit Score

A credit score shows the financial health of the borrower. Any score above 700 shows the healthy financial status of the borrower. Lenders prefer such borrowers for approving their loan against property applications.

c) Property Papers

The property papers should be up to date and legal. Properties with pending litigations are generally not approved for loans against property.

d) Income Tax File

Lenders prefer borrowers with Income Tax returns records for the past 3 years, as that proves the financial stability of the borrower.

Conclusion

While meeting the eligibility criteria of a loan against property is not difficult, not keeping the property documents, along with the other factors discussed above, can result in rejection of the application.