A significant portion of the Indian population is eager to purchase residential properties. This can be validated on 2 grounds – a property provides homeowners with the security of a permanent residence; again, a piece of land has a prospect of yielding considerable benefit in the future.
However, the primary issue lies with the initial funding, since buying a property requires a hefty sum. Considering this, leading financial institutions provide LAP that come with lucrative features, nominal loan against property eligibility, and hassle-free application process.
Nevertheless, lenders are specifically cautious when it comes to offering such substantial amount as loans. They consider the applicant’s credit history, current financial liabilities, etc. These are the primary factors lenders consider before deciding on the repayment capability of a borrower.
Apart from these, a few other factors determine the eligibility and creditworthiness of an individual to avail loan against property India –
Property Documents –
To avail a loan against property, the borrower needs to furnish respective legal documents of the property to be mortgaged. Lenders will ask for documentation including occupancy certificate, registration paper, and building plan to check if there are any current legal issues on the plot. Up-to-date and valid plot documents can compel lenders to offer a higher Loan to Value (LTV) for the mortgaged property. Borrowers may even provide a credit amount of up to 75% of their total property value.
Source of income –
A borrower’s stable income has a significant impact on the credit amount provided by a lender. It reflects the credit repayment capability of the borrower and the EMI that would be suitable for his/her budget. Reputed NBFCs like Bajaj Finserv offer Loans Against Property to both salaried and self-employed individuals.
Loan against property documents required vary slightly based on type of applicant.
- Eligibility – A borrower needs to be between 25 to 70 (self-employed), or 33 and 58 (salaried) years of age. He/she should be a resident or needs to own a property in any one of the cities specified by a lender. An individual should be working in an MNC, private or public sector; or should have a regular source of income (self-employed).
- Document–Salaried applicants need to provide KYC documents,Salary Slip, copy of the document for the mortgaged property, address proof, etc. Self-employed applicants need to provide business proof, bank account statements of the previous 6 months, etc.
The minimal documentation, borrower-friendly features, and easy-to-meet loan against property eligibility criteria help in the quick disbursal of the loan amount. This accounts significantly to the rising popularity of this loan.
Additionally, Bajaj Finserv also brings you pre-approved offers that save your time and ease the process of availing finances. These offers are available on secured loans such as home loans, unsecured loans such as business loans, personal loans, and several other financial products.
FOIR or Fixed Obligation to Income Ratio –
Ideally, a borrower’s FOIR should remain below 40%. The lower the FOIR, the higher is a person’s creditworthiness, and hence, there are more chances of a lender providing more LTV (Loan To Value).
An in-depth understanding of FOIR and how to keep it under the required limits will give borrowers a better insight into how a loan against property is processed by lenders. Hence, they can make informed decisions while choosing a loan.
Credit score –
A borrower’s credit score lets lenders develop an accurate idea about his/her creditworthiness and repayment capability. He/She must have the knowledge of cibil score for loan against property criteria for getting benefits. A credit score of 750 or above reassures lenders of the borrowers’ financial responsibility. Such a score may also compel the borrower to provide a better LTV and lower interest rates for the loan.
With such affordable interest rates, nominal loan against property eligibility, borrower-friendly features like no end-use restrictions, these secured advances can be the best option for individuals looking for a high loan amount with minimal risks.