Loan Against Property Eligibility - All You Need To Know

Possession of a property like a residence, land or commercial premises is the biggest asset of anyone’s life. You put in a lot of efforts, time and money to buy the property as a lifetime investment opportunity. Some people lease their asset to earn income, while others prefer to use it to finance their personal needs, which is popularly known as Loan Against Property or LAP.Loan against property is an easy way to avail funds in a jiffy. You may use the credit for various purposes; these can be for business, wedding, higher education, buying a new home, medical emergency and so on. This type of loan is a secured credit where your property remains collateral with the bank until you repay the whole loan amount. As compared to a personal loan, the interest rate on LAP is low.If you’re looking to apply for the loan, here are some factors that impact loan against property eligibility :

1. Age: This is a primary factor that affects your loan against property eligibility. The maximum age to avail the loan is 60 years. You cannot avail the loan at the age of 55 years when the tenure is five years or more. Also, this is the retirement age, which reduces your chances of eligibility for the loan.
2. Source of Income: Generally, banks consider you eligible for the loan if you have a stable job and fixed source of income. Banks typically give more preference for salaried individuals, government staff and professionals who have job security and get guaranteed monthly income. If you have a low salary and your EMI exceeds 60% of your monthly income, then it is likely that your loan would get rejected.
3. Job Profile: A consistency in your job assures a lender that you’re capable of repaying the loan without any defaults. However, if you’re found to be switching jobs frequently with no guarantee of a secured job or business, then the bank may not consider approving. This implies to the salaried as well as self-employed workers.
4. Credit history: Before you apply for any type of loan , credit history matters. There is an evaluation of your CIBIL score that exhibits your previous repayment records and your consistency in paying the loan on time. Defaults in repayments or delay or cheque bounce instances can prove to be a big disadvantage for getting easy approval for a loan against property.
5. Property documents & insurance: Your chances of loan sanction increase when you produce authentic property documents and have insured your asset. If there are any legal complications with regards to your property, it may reduce your eligibility chances.
6. Income tax returns or ITR: One of the factors that back your source of income generation is the regular filing of ITR. If you’re consistent with ITR for 3 to 4 years, it will increase your eligibility. In short, ITR indicates that you have a steady flow of income that which won’t affect your loan repayment capacity if the loan is sanctioned.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.