According to a report, the loan against property market is expected to grow at a 14% CAGR in value by FY2026.
This growth can result from the RBI’s decision to maintain the repo rate at 4%, making the borrowing rate feasible. However, availing a high-value credit form, such as a LAP, requires strategic planning and research.
In this regard, checking the variables or related factors will help streamline the application.
What are factors to check before applying for a loan against property?
A potential property loan borrower needs to find a reliable lender first. This will help them gain the best-servicing terms and compatible repayment structure.
In this regard, one can compare the different options available in the market and their interest rate and EMI structure offerings.
Following that, they can check the other factors that influence their borrowing, including:
- Loan amount
An individual should evaluate the credit requirement before making a loan application. Though a LAP is a secured credit form, borrowing more than required can increase the risk of defaults.
Failing to make repayments will eventually degrade the credibility, which can cause an issue in future loan endeavours. Hence, it is essential to know the exact loan amount needed and make an application accordingly.
- Eligibility criteria
Every lender set certain eligibility parameter to assess an individual’s repayment capability and reliability before approving a loan. It is essential to know that these criteria vary from lender to lender.
Some of the common loan against property eligibility criteria requirements include-
For salaried individuals-
- A potential borrower should have an Indian citizenship
- Individuals should be working in a private, public or MNC for at least three years
- Individuals must be between 28 to 58 years of age
For self-employed applicants-
- An applicant must fall in the age bracket of 25 to 70 years
- Individuals should be Indian residents
- Potential borrowers should maintain a steady income flow.
Apart from the mentioned factors, individuals should also maintain a 750+ CIBIL score and good repayment history to make the loan approval hassle-free.
- Interest rate
A borrowing usually bounds a borrower into a long term repayment structure. Therefore, choosing the right lender offering an affordable loan against property interest rates and levying no or less additional charges is essential.
This will help borrowers facilitate timely repayment and initiate better savings on disposable income. These habits will gradually improve credit scores and enhance loan eligibility.
Borrowers with a good credit report are liable to gain the best terms and customised offers.
For instance, many financial institutions extend pre-approved offers that make the loan application hassle-free. Such offers are levied on financial products like a home loan and loan against property.
Individuals can check their pre-approved offers by entering their name and contact number.
A potential borrower should also assess his/her financial capability and choose a tenor accordingly. Ideally, a long tenor will help reduce the EMIs but increase the interest outgo.
However, a short tenor reduces the interest outgo and help make significant savings. Though the EMIs will be leveraged, one can easily balance out the repayments by systematic planning.
In this regard, one can use a loan against property EMI calculator What Is The Interest Rate For Loan Against Property In India? and understand the possible savings against the selected tenor.
Potential borrowers also need to submit specified documents for hassle-free approval. The common papers required include-
- KYC papers
- Adress and identity proof
- Papers related to the land
- Bank statements and salary slips
- IT return,etc.
- Property type
Individuals should always keep a residential property as collateral against a loan against property. Ideally, a property situated in a prime location and surrounded by amenities holds high value in a lender’s eye. They offer substantial credit and affordable terms against such properties.
Individuals planning to avail a loan against property should check these factors beforehand for an informed decision.