According to a market research platform, the loan against property market is expected to grow at a CAGR of 14% BY FY2026. The demand for this type of secured credit is pretty evident from this statistic.
However, many borrowers often enquire about how much property loan they can get. This is dependent on many factors, a few of which are explaine in greater detail below:
Factors that affect the sanctioned loan amount
Applicants must understand that the amount of property loan one avails is dependent on factors, such as CIBIL score, type of property to be mortgaged, etc. These are discuss below:
One’s CIBIL score determines his/her repayment capacity. Hence, it is recommend that borrowers keep the score above 750 as this will help avail higher loan amounts at affordable rates. Furthermore, one can opt for a loan against property balance transfer to enjoy competitive rates.
Type of property to be mortgaged
The interest rate and the approved loan amount depend on the type of mortgaged property. These are the various type of property that can be mortgaged as collateral:
- Residential plot with no construction
- Industrial properties
- Residential property-rented or self-occupied
- Commercial property- rented or self-occupied
- Age and location of the property
The age and location of the property also influence the amount of loan one gets. For instance, if one’s property is in a prime location with modern amenities, it will have a higher resale value.
Profile of the borrower
The interest rate that is charge by a lender depends on the profile of the borrower. This is characterise by age, income, city of residence, occupation, etc. In some cases, the individual may be charge a lower rate of interest due to his/her steady source of income. On the other hand, a self-employed individual may be ask to pay a higher rate of interest.
To secure a higher amount of loan against property, it is vital to compare the LTV ratio offered by different lending institutions. A loan to value ratio refers to the loan amount that an individual can borrow against the current value of the concerned mortgage.
It is also indicative of the loan’s riskiness. If there is a higher LTV involve, this can increase the risk of a borrower.
Eligibility criteria for a loan against property
To secure a high loan quantum, borrowers must meet loan against property eligibility criteria. Although it varies from lender to lender, some standard criteria remain the same. These are mention below for easier understanding:
- Must be a citizen of India.
- He/she must be aged between 28 and 58 years of age.
- They must be working professionals at an MNC or any private company.
- Borrowers must have a minimum of three years of experience
- Individuals should be residents of India.
- They must be between 25 and 70 years of age.
- They must have a steady source of income with a business continuity of 5 years.
Borrowers must be able to furnish certain documents, such as proof of income, bank salary slips, and proof of identity, address and employment. Potential applicants must choose their lenders wisely. They must compare different lending institutions and check the interest rate.
Reputed financers extend pre-approved offers on several financial products, such as loans against property, home loans, etc. Such offers expedite loan applications. Customers can check their pre-approved offers by entering their names and contact details.
How to apply for a property loan?
One can apply for a property loan through the online mode. One has to follow the above-mentioned steps while applying:
1: Navigate to the official website of the lender and fill out the application form of LAP.
2: Provide details, such as age, name, employment status, income along property details.
3: Submit the application. The verification process takes a bit of time. However, it is best to check whether one meets the eligibility criteria before applying. This will ensure getting a prompt response.
4: After the lender has verified your documents, the loan amount will be disbursed.
Hence, these are the factors that affect the amount of property loan. However, one must not default in payment, impacting the overall credit score.