A loan against property is a secured funding option for big-ticket expenses. It can be acquired easily by mortgaging your property – residential or commercial – as collateral. The amount sanctioned is equal to 60% to 70% of the property’s current market value.
Considering that it is a secured credit, the interest rates are also favourable compared to unsecured credits like personal loans.
Loans against property can also be used to meet diverse expenses such as debt consolidation, wedding, higher educational or any other. Nonetheless, there are a few factors that play a significant role in determining your mortgage loan eligibility,
Given below are a few factors that determine your eligibility for a mortgage loan –
- Income –
Your income is the main factor that decides your repayment capacity. If you are employed at a reputable firm or public sector company with a stable income, you have a high repayment capacity. Consequently, you will be considered eligible by lenders.
Self-employed individuals with a regular income, such as doctors and chartered accountants, are also considered eligible.
The minimum income to apply for a mortgage loan varies based on your city of residence. Hence, before applying for a loan, check the minimum income specified by your lending institution.
- CIBIL score –
CIBIL or credit score is a representation of your repayment history. Lenders check it before approving your application to gain an idea regarding your credit history.
A credit score of 750 or above reflects that you have repaid credits on time and are less likely to default. Therefore, lending institutions will consider you as a low-risk borrower, and it will improve your eligibility. Favourable credit score also comes in handy while negotiating with your lending institution regarding mortgage loan interest rate.
On the other hand, if you have a poor or no credit score, you will be considered a high-risk borrower.
- Fixed Obligation to Income Ratio –
Lenders will also take into account your monthly obligations based on your total monthly income. This enables them to determine the disposable income that you will use to repay your loan and whether you are likely to default on your loan.
Therefore, a low FOIR means he or she will be considered more eligible for a loan against property.
Apart from the above factors, you should also have an idea about the basic mortgage loan eligibility criteria. These are as follows –
For self-employed applicants:
- Applicants should be between the age of 25 – 70 years.
- They should have a regular source of income.
For salaried applicants:
- He or she must be 33 to 58 years of age.
- They must be employed in a recognized private or public sector firm or an MNC.
Besides mortgage loan eligibility criteria, applicants should also check out the list of documents required during the loan application process. Keep the following documents handy for a hassle-free application process –
- KYC documents, which include PAN, Aadhar, driving license, passport, voter ID card or any other officially recognized documents.
- Salary slips, income tax returns, bank account statements for the last 3 to 6 months.
- Documents of property that is to be mortgaged.
- Proof of business.
You can easily apply for such credits online if you meet all the mortgage loan requirements. Make sure you know all the points before applying for a loan against property.
Go through the steps given below to gain an idea about the application process –
Step 1: Visit your lending institution’s official website.
Step 2: Go to the loan against the property section and access the application form.
Step 3: Fill in the form with the required details and submit it.
Once the necessary documents are collected, the lender will begin the verification process. Usually, it takes around four days for a loan against property to be processed.
You can opt for such credits against any property that you own. However, residential properties are considered the safest option which increases their eligibility. Consequently, they have a better loan to value ratio compared to commercial properties.
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