Loan against property has for long been one of the popular ways to avail lump sum funding to fulfil big-ticket expenses. One can thus acquire a high-value loan through this funding option by mortgaging a residential or commercial property. Nevertheless, since it is a long-term borrowing option, availing the loan also requires proper financial planning. Further, fulfilling the loan against property eligibility requirements laid down by your lender is essential to qualify for the advance.
The eligibility criteria fixed by different lending institutions could come to your way while availing a loan against property. It thus needs to be taken into consideration before proceeding with the application process. Even though a loan against property is a secured loan, the lender needs to be convinced that you are creditworthy and will be able to make timely repayments. So, below given are some of the typical factors that can affect your loan against property eligibility.
6 Factors which affect your eligibility for a loan against property
- Age of the applicant
It is one of the most important factors to consider before availing a loan against property. The lenders also consider it as a primary eligibility factor because it determines a person’s ability to repay this long-term loan. An application early in your employment can help avail the best features on the advance.
However, if an individual is soon to retire, it reduces his or her capacity to make timely repayment of the loan for a long term. As such, it is most likely that their loan application will be rejected, or at the least will accompany a shorter tenor than otherwise if approved.
The age criteria under loan against property eligibility usually fall between 33 and 58 years for salaried applicants. For self-employed individuals, it remains between 25 and 70 years. You can opt for shorter loan tenors or apply with a younger co-applicant to improve your loan approval chances in this context.
- Employment status
An applicant’s employment status and its stability are equally important when it comes to assessing his/her repayment capacity. The eligibility criteria could, however, differ slightly for salaried individuals from that of self-employed individuals.
Your employment history is also likely to be taken into consideration. How long an individual has been involved in a profession, how frequently he/she has switched companies, etc. are checked before sanctioning a loan against property.
- Income of an applicant
Monthly income of an applicant plays a significant role in determining his/her eligibility to borrow a property loan. One must, therefore, state a regular source of income to convince the lender of his/her capacity to pay the required EMIs, which include both the principal and property loan interest rate. Ideally, the loan EMI, alongside any other fixed monthly debt being serviced during the application should remain within 50% of an individual’s monthly income, thus indicating his/her ability for timely EMI payment without straining the finances.
- Credit history and credit score
Credit history and score of applicants stand as an essential factor affecting one’s loan against property eligibility. They reflect one’s creditworthiness and behaviour in handling loans and advances. Such a score should ideally be above 750 for you to represent disciplined credit behaviour. However, any repayment delays recorded in your credit history can pull down this score, thus giving your lender a reason to question your credibility. It is thus essential that you make timely repayments of any existing debt and also adopt other reliable credit habits to represent high eligibility.
- Tax Returns filing status
Before applying for a loan against property, you must have filed all the necessary tax returns for the preceding 3-4 years. You need to keep all documents related to necessary taxes organised, including ITR, as you will require submitting them along with your loan application. While following the steps to apply for a loan against property, make sure to organise these documents simultaneously.
- Valid property papers
An applicant needs to provide all the valid and authentic property documents to the lender to avail a mortgage loan. A property can only be mortgaged when it has proper documents like registration certificate, building plans, clearance bills, NOC, and so on.
You may as well look for pre-approved offers provided by select lenders to avail financial assistance faster. Such offers also assure a hassle-free loan processing and are available for several financial products like loans against property and home loans. To check your pre-approved offer, you simply need to enter your name and contact number. Are you looking for vat registration uae then read more how to apply for VAT registration in UAE.
To check your loan eligibility or understand your loan repayment better, you can also use the loan against property EMI calculator. It helps you estimate your monthly expenses as per the loan amount and tenor selected. Make sure to keep this and all other eligibility factors in mind before going ahead with your loan application.
