As the name implies, an online loan against property is a secured loan in which real estate has been pledged as security. This isn’t the same as a home loan, which is a kind of loan used to pay for a house.
- Loans Against Property is a popular financing option for several reasons. A Loan Against Property is a secured loan, hence the interest rate is lower than unsecured loans. Further, such loans can be utilized for high amounts (depending on the size of the mortgage) and the repayment schedule can be very long (it can go as high as 30 years).
- Nowadays, a Loan Against Property can be availed very quickly and without much hassle. Lenders are becoming more customer-centric and have made quick disbursals their priority.
- Almost anyone with property can apply online for a Loan Against Property, however, certain criteria need to be met. In case there are some minor discrepancies, a person may still be able to avail of such a loan but at a higher interest rate.
In this article, we’ll cover the most important and commonly used criteria to determine eligibility for a Loan Against Property.
Age
Usually, lenders require that a person is between the ages of 23 and 60 years.
The lower limit of the age of 23 years has been placed to ensure that the person is of sufficient maturity to be able to avail of an online Loan Against Property. Further, individuals under the age of 18 are not legally adults and they cannot enter into any transactions. Another reason for keeping the lower limit at around age 23 is to provide the individual with sufficient time after entering adulthood to build up a stable income and a credit history.
The upper limit of the age of 60 years is the age of the borrower at the time that the loan matures. For example, if you take out a loan at the age of 30 years with a tenure of 30 years, then the loan will mature when you have reached 60 years of age. This upper limit has been placed to ensure that the person is still of working age and has a regular source of income at the time that the loan matures. This makes it easier for lenders to be sure that the individual will be able to pay off the entirety of the loan.
Income
- Almost every lender will check the source of income of the applicant. There may be different rules for income that apply to salaried individuals and self-employed individuals, but the main criterion is that the applicant must have a regular source of income that is sufficient to be able to service the online Loan Against Property.
- If the applicant is a salaried individual, then the lender will usually ask for salary slips for the last six months or so. These salary slips will be used by the lender to ensure that the applicant has a job and to ascertain how much the applicant earns.
- If the applicant is a self-employed person, then the lender may ask for financial statements of his bank account. The lender will use this information to ascertain whether the self-employed applicant has a regular source of income and for how long he’s had the income. If the income period is too short, then the bank may reject the online application for a Loan Against Property.
- It is not enough for the applicant to have a source of income. The applicant must have had that source of income for a sufficient period. This ensures that the applicant is not likely to lose that source of income.
- Further, if the applicant is an SME, then the lender may ask for audited financial statements of the company to ensure that it can service the loan.
Property to Be Mortgaged
The most essential criteria for a Loan Against Property, as the name suggests, is a property that can be mortgaged. Lenders accept both residential and commercial properties and in certain cases agricultural properties as well.
The lender will usually be willing to disburse a loan of an amount that is equivalent to 60% to 80% of the market value of the property or properties that are being mortgaged.
For example, if you have a property worth Rs 1 crore, then you should be able to take out a Loan Against Property of around Rs 70 lakhs.
The eligible loan amount can be higher for commercial properties compared to residential properties.
CIBIL Score
The CIBIL score is your credit score. Essentially, a credit score is accorded to individuals and companies to ascertain how credit-worthy they are. The higher the CIBIL score, the more likely it is that you will be able to pay off your online Loan Against Property.
The CIBIL score can range anywhere from 300 to 900. There are a large number of factors that can determine a CIBIL score. Some of these factors include your credit history, your income level, your net worth, and so on.
Usually, lenders only provide a loan to applicants that have a minimum CIBIL score of 700. A score of 700 is enough for the lender to believe that the applicant has a decent chance of being able to service their loan. In other words, if you have a score above 700, you can apply online for a Loan Against Property with a high possibility of a positive outcome.
Documents Required
Before a Loan Against Property can be processed, the applicant will need to provide a wide variety of documents so that the bank has proof of their claims. Even though every lender differs in terms of exactly which documents they may ask for, we’ve curated an indicative list for you:
- Identity Proof (PAN Card, Aadhar Card)
- Address Proof (Utility Bills, etc.)
- Latest salary slips or bank account statements.
- Copy of the documents of the properties to be mortgaged.
- Income tax returns.
While a loan is being processed, the loan officer may ask for additional documents as well. If any discrepancies are found within the documents, then the application is liable to be cancelled.
Wrapping Up
Nowadays, you can apply online for a Loan Against Property. A Loan Against Property can be a great way for borrowers to raise capital for almost any purpose. You can start a business, pay off your medical bills, pay for your children’s marriage or education, and so on. Before taking a loan from a lender, ensure that they are credible institutions. You might want to check out the wide range of options available at Credit success for easy and hassle-free loan disbursal.
