How to Calculate your Eligibility for a Loan against Property?

Do you want to take a loan against property? That is a great decision.

Loan against property is one of the most popular ways to access funds in the market. The offered property acts as collateral against the loan amount while you can continue to use it as you wish at the same time. It is a long-term financing option that can be used for any personal and business use you may have. They come without any end-use restriction and allow the customer to use the funds at their convenience.

Eligibility Criteria for Loan against Property

The eligibility of a loan against property is calculated based on the repayment capability of the borrower. The repayment capability is determined by the applicant’s age, income, qualifications, spouse’s income, etc.

It is recommended to check the eligibility for the loan beforehand as it will let you know whether you qualify or not before applying. Eligibility criteria depend on a variety of factors; it differs if you are a salaried individual, self-employed, or an SME. Below are the main parameters a borrower needs to pass to avail loan against property. 

• Residence: Loan against property is available for all residing Indian citizens and all Indian SMEs.
• Age: For salaried applicants, the lender usually prefers the age between 21 to 60 years and for self- employed applicants to be between 25 to 65 years of age.
• Source of income: A steady source of income is a must when applying for a loan against property. A salaried individual could be an employee in an MNC, the public sector or a private company. Both should submit KYC documents, Income Tax Returns for the last 2 years, Form 16, bank statements of the last 6 months, and salary slips in the documentation process.
• CIBIL score: It plays an important role when applying for a loan against property as it determines whether the applicant is reliable or not. Both salaried and self-employed individuals should have a minimum CIBIL score of 700. It shows that they possess less risk to the lender and have a higher chance of repaying the EMIs in time.
• Present obligations: Lenders check the borrower’s for any existing debts, credit card dues, etc. to verify if they will be able to repay another debt without hindering their daily finances.

Lenders take the borrower’s FOIR (Fixed Obligations to Income Ratio) into account to determine their eligibility. There are different FOIR for different loans, but it is better to have a lower FOIR to expand the chances of getting your loan approved. It shows the borrower is capable of meeting all the obligations regularly even after paying the EMIs.

A borrower can always avail of a property loan with meeting the mentioned eligibility criteria for loans against property. If you see you’re falling behind a little on any one of the parameters mentioned above, you could always take some time to build it up since loan against property is a long term type of financing.

Depending on your requirement, a lender like Fullerton India provides you customized loan against property to cater to your needs and takes you on a transparent and hassle-free loan journey. With interest rates starting at 9%, they offer flexible repayment tenures, so the borrower has the power to plan their finances ahead.