HomeEconomyTop Seven Factors That Affect Your Eligibility For A Loan Against Property

Top Seven Factors That Affect Your Eligibility For A Loan Against Property

India’s loan against property segment is expected to grow at a CAGR of 14% in terms of value addition and will touch the mark of $857.57 billion by the end of 2026. The primary reasons behind this remarkable growth are affordable interest rates, availability of considerable loan amount and flexibility of fund utilisation.

However, if potential borrowers are contemplating such financial products to meet their high-rise expenses, it is essential to learn about the eligibility criteria for loan against property and the factors influencing it.

Seven crucial factors impacting loan against property eligibility

Availing of a property loan is not a big concern anymore as leading financial institutions extend substantial loan amounts against collateral as security. The maximum loan disbursement relies on the market value of the mortgaged property. 

However, lending institutions consider certain factors for denying or approving loans. Individuals must be aware of these factors intense effect on loan against property:

  • Loan amount

The opted loan amount has a significant impact on its term. It means if an individual opts for an extended loan tenor, it will be convenient for them to repay debt as EMIs get affordable because the amount is distributed over a longer period, thereby easing the repayment burden.

In this regard, for choosing an ideal tenor, one can use a loan against property EMI calculator or eligibility calculator to determine EMIs, interest component, eligible amount and ideal tenor that suit his/her requirements.

  • Current employment 

Another essential eligibility criterion for a loan against property is the borrower’s current employment. Almost every financial institution keeps a tab on existing employment status and the borrower’s monthly income to get assurance about their capability of paying EMI on time. Besides, the working period in the organisation also plays a significant role as frequent job changes can give an impression of the unstable financial standing of the borrower.

  • Poor credit history

It is one of the crucial factors lenders check when approving a loan against property. Ideally, a score of 750 and above is considered healthy, and with such scores, borrowers can negotiate with the lender for competitive property loan interest rates and flexible terms.

On the other hand, another way to get affordable interest rates is by opting for a loan against property balance transfer. Individuals can transfer their outstanding amounts to another financial institution offering a better interest rate by choosing this facility.

  • Property’s age

Lenders specify a certain age limit for the property to be used as collateral for raising funds. The loan against property tenor can’t exceed the age limit specified by the lender. If the property is old, its market value will be lower. On the other hand, a renovated and good-conditioned property is more favourable and gets quick approval from the lender.

  • Relevant property documents

When planning to apply for a loan against property online, individuals must produce relevant and authentic documents for the mortgaged property. It includes approvals from certified authorities, title deeds and other documents required by a concerned financial institution. The lender must get assurance that the mortgaged property possesses clear title and is approved by local authorities before approving the amount.

  • Adequate ITR

Another significant eligibility criteria for a loan against property is complete ITR documents. Usually, lenders ask prospective borrowers to submit the last three year’s ITR documents. However, if you fail to submit these, ensure to provide other financial statements and documents to prove stable income flow.

  • Include co-applicant 

Individuals with poor credit scores should apply for loan against property with a co-applicant. If the co-applicant’s credit score and repayment history are impressive, it will improve the chances of loan eligibility and approval.

Now that prospective borrowers are aware of the crucial factors impacting loan eligibility against property; they must also know about the availability of pre-approved offers extended by leading financiers. These exclusive offers are available on a range of secured and unsecured financial products and allow existing borrowers to avoid the hassle of extensive documentation. To check your pre-approved offer, submit your name and contact information.

Thus, to conclude, availing such loans is not difficult if individuals meet the eligibility criteria for a loan against property and learn about the factors affecting loan eligibility. However, it is essential to grab the best deal to enjoy maximum benefits.

Read Also: Easy Steps to Apply for a Loan Against Commercial Property

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