All You Need to Know About Loan Against Property Eligibility Criteria

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All You Need to Know About Loan Against Property Eligibility Criteria
All You Need to Know About Loan Against Property Eligibility Criteria

New Delhi : Loan against property (LAP) eligibility indicates the parameters one must meet to avail of financing under a loan against property. At times, it also refers to how much funding one can secure by pledging their property. All properties, including commercial, industrial/joint ownership, and residential ones, can be pledged as collateral to avail of funds under this financial instrument. Loan against property eligibility check is based on a combination of personal eligibility and eligibility per the property value.

Loan Against Property Eligibility Criteria

Both salaried, as well as self-employed individuals, can avail of a loan against property. Let us look at the eligibility criteria for each of these categories.

Salaried Individuals

Any individual employed with a private or public sector company can apply for this loan.

Lenders usually look for stability in employment and income, so they set a minimum of 3 years of work experience as a benchmark for applications.

Typically, the applicant’s age must be above 28 years at the time of loan commencement and up to 60 years at the time of superannuation.

Self-employed Individuals

The applicant’s age must be ideally above 25 years at the time of loan against property commencement and up to 65–70 years when the loan matures.

Professionals such as doctors and chartered accountants can also apply. In fact, they can often negotiate better borrowing terms than other applicants.

Lenders seek stability here as well and often ask for documents to prove business continuity and a steady income. Most set 5 years of business vintage as a benchmark for applications.

Lease Rental Discounting (LRD)

All resident borrowers can apply for a loan against property. However, the lessee must be a company defined per the Companies Act of 1956 (Note that in retail real estate, the lessee need not be a company).

Funding is generally delivered against ready and commercial properties. Usually, the same is expected to be restricted to either about 85% of the net current value of future rentals or to 50% of the property value, whichever is relatively lower.

Loan Against Property Eligibility Factors

Several factors influence loan against property eligibility. These include:

Borrower’s age

CIBIL score

The city where the property is located

Residential status

Employment status (in the case of salaried applicants)

Type of business 

Source of income

Employment details, including years of experience, monthly income, industry, etc.

Type of company the borrower is employed in, such as a private ltd., partnership, or proprietorship enterprise (in the case of salaried applicants)

Business details, such as the nature of business and profitability, among others (in the case of self-employed applicants)

Number and quantum of obligations

Type of property mortgaged, i.e. whether residential, commercial, or industrial. Also, whether the property to be mortgaged is self-occupied, vacant, or rented out.

The consolidated market value of the property being mortgaged.

Additional factors could also affect the loan against property amount sanctioned to you. These are more likely to be case-specific based on the lender and their policies.

How to Enhance Loan Against Property Eligibility Criteria

Borrowers can consider adding an employed co-applicant for their loan against property application to enhance the sanction amount. They can also consider:

Disclosing their earnings from additional legal sources of income (All income must be appropriately documented)

Foreclosing existing unsecured loans, such as a personal loan or a business loan (to showcase a larger bandwidth to pay higher EMIs)

Clearing their credit card overdue/outstanding balance

Pledging additional property to enhance chances of funding against property

Some Frequently Asked Questions about Loan Against Property

1. How do I check my loan against property eligibility?

Ans: A borrower can check their loan against property eligibility with the help of the LAP loan eligibility calculator. It’s recommended that applicants check their loan eligibility before submitting an application to maximize approval.

2. Will a loan against property be sanctioned for CIBIL defaulters?

Ans:  A high CIBIL score, preferably above 750, is ideal to avail of a loan against property. With a less than ideal CIBIL score, your creditworthiness is questionable, which can either lead to the rejection of your application or less than ideal borrowing terms.

3. When can an applicant apply for a loan against property pre-approval? What is the loan against property eligibility criteria?

Ans: A borrower can apply for a loan against property pre-approval anytime. The preapproval usually reflects accurate LAP eligibility, which is beneficial in planning how much you can borrow and how easily you can repay it. Further, it helps save time as a significant element of the loan sanction process has been accomplished already.

The Final Word

In today’s day and age, many lenders offer favourable terms for various financial solutions. The financial landscape has evolved to make the loan against property application process less cumbersome. To learn more about loan against property interest rates, we recommend using a loan against property calculator for exact results. 

To know about how to apply for loan against property, borrowers should get in touch with their lender of choice. Of the many reputed lenders that offer loans against property, a trusted option is Bajaj Housing Finance Limited. Not only is their process simple and hassle-free, it’s exceptionally quick. Individuals who have submitted all requested documents and received approval can expect funds to be credited in their accounts in as little as 72 hours.