What Are the Eligibility Criteria for Obtaining a Loan Against Property?

At various stages of one’s life, people may require funds for managing their big-budget expenditures. In such cases, a loan against property (LAP) can help you avail large sums of money by mortgaging any residential or commercial property registered in your name. It enables you to fulfil a number of personal and professional financial commitments such as funding higher education, housing needs, family weddings, medical emergencies, business requirements, and so on.  

As a secured type of loan, a property loan grants you high-value loans at relatively lower interest rates with longer repayment tenors letting you pay the monthly instalments at a comfortable pace. The amount of loan that you may obtain primarily depends on your loan eligibility and the value of your pledged property. Here’s a detailed look at the eligibility criteria for availing a loan against property. 

Loan Against Property Eligibility Criteria

Bajaj Housing Finance Limited offers loans against property to salaried, professional and self-employed applicants at competitive rates of interest. If you wish to avail of the loan benefits, you need to meet very basic eligibility requirements as given below: 

Eligibility Parameters	For Salaried and Professional Applicants	For Self-Employed Applicants
Nationality	Applicants should be resident citizens of India	Interested individuals need to be residing Indian citizens
Age**	They must be between 28  to 60 years of age	Applicants should be aged between 25 to 70 years
Employment Profile	They should be employed by a public/private sector firm or a multi-national company for a minimum of 3 years	They must have a business vintage of at least 5 years in their current enterprise.
City of Residence and Property Location	Delhi, Mumbai, Pune, Ahmedabad, Bengaluru or any other city where BHFL has its branch offices	Delhi, Mumbai, Pune, Ahmedabad, Bengaluru or any other Indian city where BHFL has its branch offices

  

**The upper age limit specified here is the applicant’s age considered at the time of loan maturity.  

Prospective property loan borrowers can check their LAP eligibility with the aid of BHFL’s online Loan Against Property Eligibility Calculator to get a fair estimate of their preferred loan amount.  

How Is Loan Against Property Eligibility Calculated?

Loan eligibility is the foremost factor to be appraised while availing a loan against property as it helps lenders understand your repayment potential and ensure that you can pay the EMIs on time. They will assess several essential aspects such as your income, net monthly liabilities, location, CIBIL score and history, qualifications, job profile, etc. as part of mandatory eligibility checks. 

Lenders also enlist the help of lawyers and structural engineers to carry out a series of assessments like legal and technical verification of the mortgaged property. This enables them to review the property’s current market price and authenticate the related documentation. They mainly evaluate the type of property, its age, condition, location, neighbourhood, amenities, infrastructure and the like. Thereafter, based on these factors, lenders will decide whether to grant you a loan and if so, then on what terms and conditions. 

When you pledge a residential property, lenders might sanction a loan amount up to 60% of the property’s value. In case of a commercial property, they may extend up to 70% of the property’s market price as loan. To take an example, if your residential property is valued at Rs.70 lakh, you can avail a maximum loan of Rs.42 lakh. For pledging a commercial property, which costs the same, you can expect a LAP up to Rs.49 lakh.  

Normally, the loan-to-value (LTV) ratio ranges between 65% - 75% for a loan against property but it may differ based on your profile and property. Applicants can access a free online Loan Against Property LTV Calculator to gauge the expected property loan amount based on the nature and value of their property as well as the net disposable income.   

Documents Required for a Loan Against Property

The documentation requirements for a property loan are minimal just like the LAP eligibility parameters. Following are the essential documents that lenders require at the time of processing loan applications. These include: 

• Identity and residence proof – PAN card, voter ID, driving license or passport (any one) 
• Proof of income – Bank account statements, income tax returns, etc.  
• Property-related papers – Buyer agreement, title deed, property tax receipts and so on 
• Other documents – Paperwork pertaining to your declared business and other revenue-generating ventures (for self-employed applicants) 

Note: This is just an indicative list. Lenders may ask for additional documents during loan processing. Confirm the documentation requirements with your lending institution, well in advance, and keep them handy for faster loan approvals.   

Factors That Impact Loan Against Property Eligibility

Your eligibility for a property loan is influenced by a number of factors related to your personal and professional profile, and the property placed as collateral such as: 

Credit Score

Your credit score has a strong bearing on the loan against property interest rates. A healthy CIBIL score of 750 or higher assures lenders of responsible credit behaviour and they will offer such individuals attractive interest rates. A lower CIBIL score, on the other hand, denotes poor credit history. Hence, applicants with unfavourable scores may have to contend with higher interest rates on their property loans. 

Also Read: Know How to Check Your CIBIL Score 

Age of Applicant

An applicant’s age tells lenders the number of active working years left with them to effect timely EMI repayments. This is why younger applicants may enjoy better loan deals and swifter approvals as compared to older applicants, whose spending potential may diminish due to shorter service years ahead.

Fixed Obligation to Income Ratio (FOIR)

Your monthly liabilities reduce the ready availability of disposable income that could have otherwise gone towards repaying the loan. A low FOIR raises your loan eligibility, subject to other loan considerations.

Sources of Income

Lenders give preference to salaried individuals, government staff and professionals who have job security. A stable job with fixed sources of income boosts LAP eligibility. However, if you draw a modest salary and your EMI exceeds 50% of your monthly income, you may find it difficult to avail of a loan.

To Conclude

Some individuals may fall short of loan eligibility. Before they apply for a LAP, they should take corrective steps to enhance their eligibility. They can consider paying off their ongoing obligations, including all income sources, choosing a longer tenor and maintaining a good credit score. If you seek a property loan, Bajaj Housing Finance Limited can help you meet all your financial needs with heavy loan amounts up to Rs.5 Crore* or higher, basis eligibility, and flexible repayment tenors up to 18 years. You can also expect quick loan disbursals within 72 hours* of document submission.