Financial emergencies can occur anytime, leaving you searching for solutions. Though there may be various options on the table, a loan against property (LAP) can prove to be useful for mobilizing a good deal of money. However, before availing of such resources, it is essential to comprehend the qualification for an LAP. This blog provides you with information on factors affecting your eligibility for a loan against the property.
Who can avail of a Loan Against Property?
Almost all banks and financial institutions in India provide the facility of LAPs to those people who fulfil some basic requirements. Here’s a breakdown of the eligibility factors
Age: The minimum age limit commonly ranges from 21-25 years while the maximum age limit ranges from 60 to 65 years depending on the lender and the term of the loan.
Citizenship: Applicant must be an Indian resident and the date of birth of the applicant has to be on or after 1st July 1988.
Employment Status: There is no distinction as to self-employment; both the ones with a salary and the other professional employer. For the salaried applicants, they should have a minimum of 2-3 years of experience in a reputed organization. The government requires self-employed loans to show evidence from the Income Tax Returns (ITRs).
Credit Score: The credit score should be as high as possible- above 700. This will show the creditworthiness of an individual and their likelihood of having the loan approved. Credit scores can also be checked from different sources for free.
Property Type: LAPs are usually secured with residential and commercial properties as the major forms of collateral for LAPs. Ownership documents should be legal and the property’s location should be marketable. Other types of properties that some of these lenders may finance include leasehold properties.
Factors Influencing Loan Against Property Eligibility
Applicant’s Income: Your income has a significant role in determining the loan amount you can afford. Your DTI is the amount of money you use to repay your loans every month, and the lenders will wish to avoid situations where it is too high.
Property Documents: Have relevant, updated, and legal documents such as sale deeds, occupancy certificates, and approved property maps to ensure fast approval of the loans.
Loan Purpose: Some of the lenders can provide tiny improvements in the interest rates for particular loan purposes such as education or medical emergencies.
Loan Value Ratio: This includes the maximum loan amount that the lender can lend you compared to the market value of your property. High LTVs are only possible for self-occupied residential properties.
How to Improve Your Chances of Loan Approval
Co-applicant with a strong financial profile: In this case, adding a co-applicant to the loan application with proper and stable earnings and a comparatively better credit score will be helpful.
Choose the right property: Choosing a property which is situated in a profitable zone can strengthen your loan request.
A Good Credit Score: Keep track of your credit score every now and then and address any discrepancies. This is because the timely payments made on the existing loan can positively impact your interest rates.
Planning Your Loan Repayment
It is important to note that before arriving at the choice of an LAP, one has to make use of a Mortgage Loan EMI calculator. Among these, the loan amount calculator allows you to calculate the likely EMIs for the chosen loan amount, the interest rate, and the term of the loan. This also lets you estimate the possibility of repayment so that you can select a loan that aligns with your financial situation.
Conclusion
A loan against property is a useful financial tool, but one must know all the rules regarding eligibility. One should effectively analyze all the factors and using mortgage loan EMI calculators correctly will make it easier to proceed with the right choices. So, it is always important before engaging in a loan against property to understand that borrowing and proper financial planning are vital factors to this.