factors that affect loan against property eligibility

7 Factors That Affect Loan Against Property Eligibility

April 04, 2024 • 581 views

Like any other loan, a Loan Against Property (LAP) has specific eligibility criteria for getting your application approved. Lenders have specific requirements such as minimum credit scores, minimum income, repayment capacity, property value, etc., based on which they grant loans. You must be mindful of the Loan Against Property eligibility criteria to avoid your applications getting rejected. 

This blog takes you through the 7 important factors that can improve your chances of getting a Loan Against Property. Read on!

Factors Affecting Your Loan Against Property Eligibility

Here are seven crucial factors that can affect your Loan Against Property eligibility:

1. Current Employment Status

If you are salaried or self-employed, you are eligible to apply for a loan against property in India. Before sanctioning the loan, the bank or NBFC will check your employment status. Employment status helps lenders understand your earnings and expenses. Based on your employment status or any ongoing loan, they estimate your repayment capacity.

If you are unable to manage your expenses or default on the outstanding debts with your current earnings, lenders might reject your loan application. On the other hand, if you earn sufficient income to meet your expenses and manage debts, lenders will sanction the loan amount with competitive interest rates.

2. The Regularity of Income Tax Returns

Lenders often ask you to submit your income tax returns for the past 3-4 years. Your ITR documents will prove you have a steady cash flow for a long period. This will highlight that you can manage your present expenses well and have enough expenses to clear your Loan Against Property dues.

3. CIBIL Score of the Borrower

When you apply for a Loan Against Property, the lender will first check your CIBIL score while reviewing your loan application. This credit score will let the lenders know how you manage your ongoing debts.

 A high credit score, increases your chance of getting Loan Against Property. Whereas, a low credit score may lead to rejection. Even if any lender sanctions a Loan Against Property for you, they might levy high-interest rates.  

4. Age of the Applicant

Your age gives an idea to lenders regarding employment tenure while reviewing the loan application. If you are a retired individual or approaching retirement, banks or NBFCs might charge higher interest rates while sanctioning a Loan Against Property.

In such cases, it would be wiser to apply for a joint Loan Against Property with a credible family member. This will help you furnish a double income source and boost your Loan Against Property eligibility chances.

5. Insurance of Leveraged Property

If the property you are pledging as collateral for Loan Against Property has any form of insurance security, it will be an added benefit for you. This insurance coverage might tend to enhance your credibility as the property is less likely to be a non-performing asset.

6. Tenure of the Loan

You must choose a loan tenure that is easily manageable. Using a Loan Against Property EMI Calculator is a good option for you to plan your monthly EMIs based on your desired loan tenure. Choosing a long tenure might result in lower EMIs as compared to shorter loan tenure. Based on your monthly income and offered rate of interest, you must choose your desired loan tenure.

Also Read - Decoding the concept of Loan Against Property (LAP)

7. Leverage Property Documents

While reviewing your loan application, the bank or NBFC will also closely scrutinise the Loan Against Property documents. Therefore, consider furnishing all the required documents to prove your ownership of the property. Lenders also check whether the property has any ongoing financial or legal cases.

If the property pays a part in any legal or financial discrepancies, lenders might not approve your loan application against it. You must also possess documents regarding permits from local bodies, environmental clearances, building plans, taxation documents and so on.

Also Read - 5 Things to Keep in Mind When Availing A Loan Against Property (LAP)

To Conclude

To sum up, the above factors play an important role in determining your Loan Against Property eligibility. It is one of the most accessible loans for any borrower to avail at competitive interest rates. However, consider calculating your monthly obligations beforehand to know how much loan amount is right for your finances. This will allow you to pay the EMI conveniently and also focus on savings in the long run. 

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan Against Property disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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