In India, there are several ways to get money when you have an urgent requirement. Multiple loan options make it relatively easy to tide over any crisis. And, if you are lucky to find the right loan and lender, you can breeze past the problem smoothly.
When it comes to loans, every loan is unique. While some loans provide you with a high amount, they come with many limitations. Some other loans come without a limit on the end-use and are approved quickly, but you cannot avail of a high loan amount.
If there is one loan that provides you with a high amount and unparalleled flexibility in fund usage, it is a loan against property. Additionally, the loan against property interest ratesare among the lowest loan rates you will find in the Indian market.
To avail of a loan against property, you have to pledge your commercial or residential property, either self-occupied, vacant or rented. The lender evaluates your property and decides the loan amount.
How Much Money Can You Borrow On A Loan Against Property?
The amount of a loan against property depends on many factors, including property value, location, and condition, borrower’s credit score, monthly income, and age. Generally, Indian lenders cap the maximum loan amount at 60% of the property value.
Which Factors Affect the Loan Amount of a Loan Against Property?
Besides loan amount, the following factors also affect loan against property interest rateand eligibility:
Property Value, Location, and Condition
The property value, status, and the location play a prominent role in deciding the loan amount. If your property is in a proper location with modern amenities, you can claim a high loan amount. Moreover, if the property is new, the loan amount will be high. Hence, before applying for a loan against property, you must analyse the property and quote the right amount to increase the chances of approval.
Borrower’s Credit Score
A high credit score improves the chances of loan approval. A score above 750 gives an impression that the borrower’s financial health is top-notch. It also makes you eligible to receive the best loan against property interest rate.
Monthly Income
Your monthly income is directly linked with the loan amount. You can typically use 50% of your net income for loan repayment. Hence, if your income is INR 50,000 per month, the maximum EMI amount you should choose is INR 25,000. The loan amount will change accordingly.
Age
You can apply for a loan against property starting from age 21. The maximum age at the time of loan maturity is 60 (for salaried) and 65 (for self-employed). The closer you are to the maximum age, the riskier your loan is to the lender. Hence, the lender may decrease the loan amount and increase the interest rate.
What is the Application Process of a Loan Against Property?
You can fill the loan against propertyapplication form online or offline.
In the online mode, you need to place a request on the lender’s website and wait for a call. The customer support representative would verify your details on the call and send a loan officer to your residence or office. You can fill the form and submit it along with the required documents.
In the offline mode, you need to visit the lender’s branch and fill the form physically. You may also need to carry the documents, which the loan officer will verify.
On successful verification of documents and property inspection, the loan amount will be credited to your bank account.
Conclusion
The right loan amount plays a major role in determining your satisfaction with a loan against property. Evaluate your repayment capability well before picking the right loan amount.
