A loan against property is famed as one of the most uncomplicated loans in India.
You can get a high loan amount, extended loan term, flexible repayment options, simple documentation, easy eligibility, and flexibility in end-use.
The application and approval process is uncomplicated and fast. Any Indian citizen can pledge a residential or commercial property to apply for a loan against the property for better property management.
Read on to know about the eligibility criteria and documents required to apply for a loan against a property.
Loan Against Property – Eligibility Criteria
When you apply for a loan against a property, the lender evaluates your eligibility and determines the interest rates.
The following are the primary eligibility criteria of a loan against property:
- The applicant must be an Indian citizen.
- The applicant’s age must be above 21 and less than 60.
- The applicant must own a residential or commercial self-occupied, vacant, or rented property.
Besides the three primary factors, the following factors also play a prominent role in determining loans against property eligibility and interest rates.
1. Borrower’s Credit Score –
A 750+ credit score is considered a decent credit score. It assures the lender that the borrower can manage their finances properly. It also signals that the borrower takes their loan repayment seriously.
2. Monthly Income –
Indian lenders often want a borrower to earn a minimum amount every month to be eligible to apply for a loan against property. The minimum income varies between INR 15,000 and 50,000 every month.
3. The Nature of Work –
Loan against property interest rates and eligibility depend heavily on the borrower’s nature of work. For example, loans to full-time salaried professionals are approved faster than those in a part-time job or freelancer.
4. Loan Amount –
A loan amount above 50% of your net monthly income can provoke your lender to scrutinize the loan application more. Although you can apply for a loan against property for an amount of up to 60% of your property value, it is wise to keep the loan amount at less than 50% of your net monthly income.
5. roperty Location –
The property’s location also determines the loan against property eligibility and interest rates. For example, a property in a prime location with all modern amenities has a higher value than one in a nondescript locality.
Loan Against Property – Documents Required
The following are the documents required to apply for a loan against property:
- Application form – You can download it online or collect it from a branch.
- Latest passport-size photograph.
- Age Proof – PAN Card, Birth Certificate, Passport, etc., are considered valid.
- Residence Proof – You may submit Electricity Bill, Ration Card, Passport, Aadhar Card as the residence proof.
- 2 months’ bank account statement (6-months for salaried professionals)
- 3 years’ Income Tax Returns.
- Proof of Employment (for salaried) and Proof of Business (for self-employed) – Appointment Letter, Salary Slips, Profit & Loss Statement, etc.
- Processing fee cheque
- Property documents, including Title Deed, Registration, etc.
When you choose the right lender, applying for a loan against property becomes a seamless process. You can also use a free loan against property calculator to know the eligibility, interest rates, and the EMI.
Ensure to read all loan terms carefully before submitting the loan application.