Unlocking Property Loan Eligibility: What You Must Understand

Loans against property, also known as property loans, are loans availed of against a residential or commercial property or a piece of land. Over the last few years, these loans have become quite popular owing to many different reasons. Before we talk about property loan eligibility, let us look at the benefits of these loans and why they have become popular.

Benefits of a Property Loan or Loan Against Property

1. Loans against property are loans secured by real estate and therefore, lenders charge a low rate of interest on these loans. In the case of property loans, interest rates start from 8.50% p.a. Such low-interest rates help keep the cost of borrowing low and affordable.

2. Loans against property come with a long repayment tenor. Borrowers can choose to repay their loan over a period extending up to 15 to 18 years. Such a long repayment period reduces the burden of loan repayment and provides borrowers with ample time to repay the loan comfortably.

3. The loan money comes with zero end-use restrictions. Borrowers can use the money to fulfil various types of personal and professional requirements.

4. Lastly, under loan against property, borrowers can borrow up to 70% of their property’s value as a loan. Thus, loans against property give borrowers access to a substantial amount of money, allowing them to fulfil all kinds of obligations and responsibilities, such as paying for a child's education or taking care of an ailing parent or family member.

Let us now try and understand property loan eligibility criteria.

Unlocking Property Loan Eligibility: What You Need to Know

Every year, lenders get loans against property applications from thousands of different individuals. Not everyone who applies for a property loan gets approved for one. Every lender has strict property loan eligibility requirements. These requirements help lenders reject loan applications from those individuals who are not capable of repaying their loans on time. All applicants must check property loan eligibility requirements before applying for a loan. Not meeting these requirements does not only lead to loan application rejection but also reduces one's chances of getting approved for a loan in the future. Here are the property loan eligibility requirements most lenders ask for:

1. The loan applicant must be a residing citizen of India.

2. They must be between 25 and 75 years of age. The age requirement for salaried people is usually lower than the age requirement for self-employed individuals. However, this is not a norm,

3. The applicant must have a CIBIL score of at least 725. The higher one’s CIBIL score, the better their chances of loan approval.

4. The individual must be the rightful owner of the property they plan to pledge as collateral.

Property loan eligibility requirements vary from lender to lender. Therefore, all borrowers must check with their lender regarding their property loan qualifying criteria and move ahead and apply only if they qualify. Borrowers must also keep in mind that the loan value and the terms and conditions on which the loan is sanctioned depend significantly on the property pledged as collateral. Properties with high resale value, such as properties located in the centre of the city or new properties with all modern amenities, draw better loan terms and conditions, such as lower interest rates and higher loan value. On the other hand, properties with low resale value attract a higher property loan interest rate and sometimes, lead to a lower loan sanction. Borrowers must therefore try and pledge a high-resale value collateral.