A loan against property offers several benefits, such as flexible repayment, a high loan value, affordable interest rates, tax benefits, etc.
Nevertheless, it is vital to know how much loan one can get against a loan against property and the factors influencing it.
Factors that determine the loan against property amount
The sanctioned loan amount depends on factors, such as CIBIL score, type of property, etc. Underlined below are the factors that affect the loan against property amount:
Age of the applicant
A borrower’s profile also influences the loan amount sanctioned by a financial institution. It is characterised by the applicant’s age, income, occupation, city of residence, etc. For instance, if a borrower is a retired person, he/she might be sanctioned a lower amount considering the risk factors associated.
On the other hand, young salaried individuals may be eligible for a higher loan amount at an affordable interest rate due to their steady source of income.
Type of property
The market value of residential and commercial property differs, and hence, the sanctioned loan amount differs too. Underlined below are various types of loans against property that can be mortgaged as collateral:
- Industrial properties
- Residential property- self-occupied or rented
- Commercial property-self occupied or rented
- Residential plot with no construction
Age and location of the property
The age and condition of the property also influence its interest rate and the approved loan amount. For example, if the property is based in a prime location and has all modern amenities, it will have a higher resale value.
When individuals opt for a loan against property, they must check the valuation of the property to be pledged. However, this amount depends upon the LTV ratio. One must be wary that a higher LTV increases the borrower’s risk, whereas a lower LTV ensures that one gets better deals.
Borrowers must check whether they can meet loan against property eligibility criteria set by the lender. If they meet the eligibility parameters, then a borrower’s chance of getting a substantial amount at an affordable interest rate increases, which expedites the process.
Furthermore, the availability of pre-approved offers extended by leading financial institutions further streamlines the loan application process and saves time. Financial products like loans against property, home loans, etc., are included in this offer, and individuals can check their pre-approved offers by providing their essential contact details.
If one has existing debts, it is best to clear them first before applying for another.
The CIBIL score summarises a borrower’s credit profile and his/her repayment capacity. Moreover, financial institutions prefer those with a CIBIL score higher than 750. One must know that one’s CIBIL score plays a crucial role when applying for a loan against property. For instance, individuals with a high CIBIL score can end up securing a sizeable loan amount at an affordable rate of interest.
How to apply for a loan against property?
Illustrated below are the various steps to apply for a LAP:
Step 1– Navigate to the official website of your preferred lender and fill out the application form. Enter your essential details such as name, contact details, address and date of birth.
Step 2: Input all income details and choose the best deals per your financial standing.
Step 3: Submit the application form. The lender will then verify your documents on legal grounds.
However, applicants must provide the required documents and coordinate while the verification process is going on, to ensure that the loan is sanctioned in a hassle-free manner.
One must remember these pointers while taking a loan against property. It is best to compare different lenders to get the best deals. One can also use a loan against property EMI calculator, which computes the number of EMIs payable beforehand to settle for an interest rate and tenor per financial affordability. However, one should not default in payment as this may impact the credit score adversely.