Loan Against Property Eligibility Criteria

What is Loan Against Property Eligibility?

When it comes to availing a loan against property, eligibility is an important factor. It affects not only the affordability but also how seamlessly you get the loan. Lenders have these criteria to ensure that you are a creditworthy borrower and will repay the loan on time. 

Different lenders have different eligibility criteria for loan against property (LAP), but the categories assessed are usually common across lenders. The common eligibility criteria for LAP revolve around your age, income, nature of employment, and property valuation.

To get more insight about LAP eligibility, how it is calculated, and more, read on. 

How is Loan Against Property Eligibility Calculated?

In simple terms, how you fare against the terms set gives the lender an idea 

about your repayment ability. So, the calculation of eligibility criteria for a loan against property is also based on assessing your financial stability and earnings. 

For this, lenders check your age, income, debt, credit score, and nature of employment. Your age is an important factor because it reveals the number of years ahead of you in your career. Based on this, lenders can estimate the length of your stable earning years in order to repay without default. 

This is because LAP is generally a loan with a longer tenure, and if you earn for a longer period, you are more likely to pay all your installments on time. Similarly, your income and obligations give the lender an idea about the repayment amount you can manage.

For example, say you have a monthly income of ₹50,000 and your monthly existing EMIs are ₹20,000. Here your disposable income for a loan becomes ₹30,000. If you apply for a loan whose repayment instalment comes close to ₹30,000, approval may become difficult. 

With a low disposable income, lenders may not have faith in your repayment ability. 

Similarly, lenders consider your credit score as it gives them an overview of your borrowing history, enabling them to assess your behaviour with credit.  

In calculating your eligibility for a loan against property, lenders also consider the value of your property. This is to ensure that the property is worth the loan amount you are applying for. 

You can even use a LAP eligibility calculator, an online tool, to check what you qualify for before applying. Doing this can enable you to apply for a loan that you are eligible for and thus increase the chances of approval. 

Simply fill in the required details – age, income, expenses, residential city and the tool will give you an estimate of the loan amount you are eligible for. 

Loan Against Property Eligibility Criteria

Given below is a tabular overview of the common loan against property eligibility criteria that you should know of before applying: 

Disclaimer: The above LAP eligibility criteria are general and may vary across lenders

Loan Against Property Eligibility Criteria of Various Lenders

Disclaimer: The above amount and criteria are subject to change at the lender’s discretion.

How to Improve Eligibility for Loan against Property?

• Pay off existing debt: Reducing your current EMIs helps you qualify for a larger loan. This is because lenders assess your disposable income to calculate your LAP eligibility.

• Apply jointly: Having a co-applicant who has a strong income profile and credit score improves your loan against property eligibility.

• Boost your financial profile: Disclosing secondary sources of income, like rental income, and bolstering your credit score are sure ways of availing more financing.

• Approach a familiar lender: Borrowing from a lender you already have a relationship with helps boost your profile. It can help you secure the funds you need more easily.

• Keep the LTV reasonable: Maintaining a high loan-to-value ratio increases the lending risk. Apply within limits to increase your loan against property eligibility.