Eligibility and Criteria for Loan against Property

Eligibility and Criteria for Loan against Property

A need for funds can arise at any moment and when you don’t have the required savings to meet your financial requirements, you can resort to loans. A loan against property is a type of personal loan which you can use for any type of personal or commercial use. The loan is granted when you mortgage a property belonging to you. The amount of loan depends on the value of the property mortgaged. The lender assesses the value of the property and then allows you a loan for up to 80% of the value of the property. Since the loan is a secured loan, the interest rates are low and affordable.

Eligibility for Loan against Property

If you have a property and are thinking of applying for a loan against property, you should, first, check the eligibility parameters and other criteria of the loan. Only if you fulfill the eligibility and other relevant loan criteria would you be able to avail a loan against property? If you don’t know about these criteria, here is what you should know –

Eligibility criteria of the borrower

  • Type of borrowers allowed to avail the loan

The following types of borrowers can avail a loan against property –

  • Salaried employees of both public and private sector companies
  • Salaried consultants
  • Self-employed businessmen
  • Professionals
  • Companies and partnerships
  • Hindu Undivided Family (HUF)
  • Other criteria

You should also fulfill the below mentioned eligibility criteria –

  • Your age should be between 18 to 70 years
  • If you are salaried your net monthly income should be at least INR 40,000. For businessmen, the net annual income should be at least INR 3 lakhs
  • Salaried employees should have a minimum work experience of 3 years. In the case of businessmen, the business should be in existence for at least 5 years
  • Credit score of at least 650 is required

These are the eligibility parameters which borrowers should fulfill. Besides these, the following criteria should also be met by potential borrowers –

  • The property should be in the name of the borrower
  • The property can be a residential, commercial or industrial property. The loan to value ratio would depend on the type of property mortgaged
  • The property which is being mortgaged should be approved by any bank or financial institution

Documents required for the loan

The following documents are also important and should be submitted when you apply for a loan against property –

  • Loan application form, duly filled and signed by you
  • Your passport sized photographs
  • Identity proof
  • Birth proof
  • Address proof
  • Signature proof
  • Income proof
  • Proof of business vintage
  • Statement of the bank account for the last 6 months
  • Registered Sale Deed, Conveyance Deed or Lease Deed of the property
  • An approved plan of the property issued by the Municipal Corporation of the place where the property is located
  • Chain of all past Sale Deeds if the property has been sold in the past
  • Latest House Tax Return or Receipt

When you meet all the eligibility parameters and associated criteria and submit all the required documents, you would be able to avail of a loan against property easily.

Additional Reading:- Use a Loan against Property EMI calculator for better results