Loan Against Property

Everything Know About Loan Against Property Eligibility Criteria

Applying for a loan against property, otherwise known as LAP, without learning the eligibility criteria is like attending a private event without an invite. Not only are your chances of getting rejected high, but a rejection would also be detrimental to your overall credit score. Lenders will rarely approve your loan application if you have a poor credit record. 

Many factors make the loan against property a popular choice, top among those are the low-interest rate on high-value amounts and a flexible repayment tenor, among others. Because of its many perks, lenders are mindful of which borrower gets approved. Ensure that you only apply after satisfying their eligibility criteria. 

To qualify, you must be within a set age range and be employed with a monthly income that can settle the equated monthly installment (EMI), and more. In this article, we will explore the loan against property eligibility criteria.

Five Criteria You Must Meet to Qualify for a Loan Against Property

Below are five prerequisites for a loan against property in India.

Age

The age range for salaried applicants is different from that for self-employed individuals and professionals. For salaried applicants, the minimum age is 25 while the maximum age is 60 years. For the self-employed and professionals, the minimum age is 28 while the maximum age is 70 years. 

Note that the maximum age (60 or 70) is the required age of the applicant at the time of loan maturity. 

Employment Status

Every financial institution you apply to will check your employment status. This is because you need a steady income to repay the loan amount if approved. Lenders also consider the type of job you have and they strongly consider applications from the following socio-economic groups: 

● Salary earners

● Professionals

● Self-employed persons

For salary earners, work experience should be at least 3 years while self-employed individuals must own a business of at least 5 years old with a three-year income tax returns (ITR) — this is the criteria set by most lenders. 

Monthly Net Income 

Your monthly net income must be sufficient to pay the EMI and close your loan. To prepare a workable repayment schedule, consider using an online calculator to determine the EMI on a loan against property

Lenders often have a minimum and maximum income range for applicants. This criterion varies from city to city— so before applying, check that your net income meets the lender’s requirement. 

Credit Score 

Your credit is another factor that determines your eligibility for a loan against property. Having a high credit score plus a clean debt repayment record raises your creditworthiness. The higher your credit score, the more lenders find you attractive. 

A credit score of 725 and above is a great position to be in as it increases your chances of getting approved for your desired amount. However, there are ways for you to work on a low credit score. Three valuable ways of doing so include paying your bills promptly, never maxing out a credit card, and paying your existing debts, if any. 

Property Value

Your property’s value is determined by factors like condition, size, amenities, and location. Note that you must provide a property as collateral so that it can be assessed to determine your eligibility and the amount of money you can get. 

Lenders also rely on the loan to value (LTV) ratio. The LTV ratio for a LAP can be as high as 70%-75% of the property value based on the lender. 

How to Apply for a Loan Against Property 

The application process for a loan against property can be completed in four easy steps listed below:

● Input your details into the online application form and submit 

● Discuss with the lender’s representatives

● Submit all documents requested by the lender and receive approval upon the consideration of your application loan amount within 72 hours.

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