It is natural to have unexpected expenses like hospital bills. Unfortunately, such big-ticket expenses will have you searching for viable options to raise funds. In the same vein, you might also want to raise funds for pre-planned purposes like expanding your business(es), funding a much-needed vacation, making some home improvements, paying for college, or even a wedding.
No matter the reason, a loan against property (LAP) is an amazing financing option to consider. So long as you have a property to serve as collateral, you can opt for a loan against property. Apart from being a loan taken against your property’s market value, a loan against property is one of the most preferred loans in India because of features, such as flexible tenor, quick disbursal, and low interest on high-value loans.
However, many applicants wonder how much they can get from taking a loan against property. Several factors help lenders determine what you get. Read on to learn more about these factors.
Factors that Affect How Much Loan Against Property You Can Get
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Here is a list of the factors that affect how much loan against property you can get.
Before a lender approves your loan against a property application and moves to disburse the approved amount, they must evaluate your property. They do this to estimate its value based on the current market trends.
The value they get plays a key role in determining the amount they will likely approve for you. The higher the property’s value, the bigger the loan amount and vice versa. Not only does your property’s market value determine the loan amount and the interest rate, but it also determines your eligibility for the loan in the first place. Lenders also consider the property’s location during the evaluation.
Lenders prefer not to get involved in any property disputes, whether it be legal or communal. They also prefer properties with clear ownership titles and property insurance. All of these requirements can be proven with proper documentation. When your property’s documents are complete and transparent, the lender’s risk lessens. This enables them to trust you and sanction higher loan amounts.
If you’re not sure about what documents your lender requires, you can look through their website.
If you have a track record of not meeting your debt repayment obligations as and when due, no lender will be willing to lend you more. Therefore, your creditworthiness is a critical factor in determining the amount you can get if your loan against property application is approved.
In the case where you default on your debt repayment, the lender will need to take legal steps to repossess your property. Doing this reduces your credit score and chances of getting future loans. This is one action that many lenders do not enjoy and to avoid it, they prefer to not approve the application. Apart from your creditworthiness, lenders also consider your age, monthly income, and city of residence.
Eligibility Criteria for a Loan Against Property
Most lenders require that you possess the following:
● You must be an Indian citizen residing in India.
● You need a credit score of at least 725.
● The age limit differs for salary earners, self-employed individuals, and professionals.
Based on the above factors, an applicant can get a loan of up to 75% of their property’s value. The loan-to-value (LTV) ratio will not only determine the loan against property interest rate but also the equated monthly instalments (EMIs)— a figure which can be calculated by an online loan against property EMI calculator.
A quick tip: To know how much a lender can disburse to you, we strongly recommend using a fast and accurate loan against property eligibility calculator.
Take a Loan Against Property in India Today
While it’s no more news that the loan against property option is a popular one in India, you must ensure that you get the best deal from the financial institution you want to get a loan from.
Make sure to look for the best lender for your needs — someone with a proven track record of providing efficient, affordable, and fast loan services.