Mortgage loans are one of the most popular types of secured credit available in the Indian financial market. It has grown at a steady 13% rate throughout the last two fiscal years. A substantial change in the economic condition of the middle-income group of India and availability of housing has allowed a lot of prospective credit seekers to mortgage a real estate and avail a loan against property. This long-term financing option comes without any end use restriction, allowing a borrower to utilise the sum according to his/her requirement. Another feature of a loan against property is its rate of interest; as the sum is disbursed against a mortgaged property, these loans usually come with a much lower rate of interest compared to other types of credit.
Several financial institutions offer such advances to prospective applicants. An easy to meet eligibility criteria and minimum documentation ensure borrowers can easily qualify for the loan whenever required.
Eligibility Criteria For A Loan Against Property
Eligibility requirements for a loan against property is calculated based on an applicant’s age, income, repayment capability, and credit history. It is recommended that one should check the loan against property eligibility before applying for the loan because it helps to find out whether they qualify for such credit or not before applying. Several financial institutions offer online loan against property calculator that can be used to determine the suitability.
The eligibility requirement usually varies between salaried and self-employed individuals. The different modes of income between self-employed and salaried applicants necessitate the implementation of borrower-suitable terms and eligibility criteria. Let’s take a look at the eligibility criteria needed to qualify for a loan against property.
- Residence – Any residing Indian citizens can apply for such a credit.
- Age – Lenders usually prefer salaried applicants between 33 to 58 years and self-employed applicants between 25 to 70 years of age. The age bracket for a salaried individual is calculated based on their retirement age; most public and private sector organisation employees retire at the age of 60 to 62 years. Input your age in a mortgage calculator along with the remaining criteria to compute the amount you are eligible for.
- Source of income – It is necessary to have a steady source of income to apply for a loan against property. Lenders calculate one’s repayment capability based on the monthly income. Both the principal amount and the rate of interest offered depend on the applicant’s income.
Both self-employed and salaried individuals have to submit their account statements and income tax returns as proof of their income. Salaried applicants also have to submit a copy of their salary slip while completing the documentation.
- Present obligations – Lenders often check applicants’ current obligations to decide their repayment capability. Any existing debts, credit card dues, etc. are verified to determine whether a person will be able to repay another debt without straining his or her finances or not.
Lenders prefer applicants with a FOIR (Fixed Obligations to Income Ratio) between 30% and 40%. It ensures they have adequate funds to cater to their daily necessities even after paying off the dues.
Borrowers should only apply for another line of credit if they can repay it within the given tenure. One can use an online loan against property EMI calculator to determine whether the instalments affect their FOIR or not. Usually, financial experts suggest repaying existing loans before applying for a long-term financing option like a loan against property.
- Financial history – Another crucial aspect of a loan against property calculator is an applicant’s financial history. Lenders look at an applicant’s credit score to determine whether they are creditworthy or not. Applicants with a good credit score are likely to pose less risk to a lender and have a higher chance of repaying the due amount in time. It is one of the main reasons why financial institutions calculate an individual’s eligibility based on their credit rating.
Additional Read: How Credit Score Impact On Loan Against Property Application
Several financial institutions, including NBFCs, often require only an easy to meet eligibility criteria for applicants to fulfil. Companies like Bajaj Finserv even provide pre-approved offers that make availing such credits simple and quick. Such offers are available on several financial products including secured credits like home loans and unsecured advances like personal loans and business loans. These are some of the most common factors that are used to calculate the eligibility criteria for a loan against property. A prospective applicant can avail credit at an affordable rate of interest and borrower-friendly terms by meeting all the above mentioned criteria.