Can I Get a Loan Against the Property on Which I Have an Existing Home Loan?

by MyMoney Mantra FinTech (Financial Technology)

There is no telling when you suddenly need finances, and unexpected situations crop up in life all the time. For instance, you may require funds for a wedding in the family or may require extra working capital for your business needs.


Whatever be the case, you know you have to find the necessary finances immediately to pay for the amounting potential expenses. While obtaining a Personal Loan is what many people look into, you can also consider applying for a Loan Against Property (LAP).


Just because you already have an existing Home Loan, it does not mean you cannot think about this kind of a loan for funding your requirements. If you are the owner of a property, reflecting on obtaining a Loan Against Property even though you have an existing Home Loan is a good idea. However, there are various aspects you need to take into consideration.


Eligibility criteria for obtaining a Loan Against Property

Applying for this loan comes with certain conditions. You have to pass the eligibility criteria. Only then you get this loan even though you already have an existing Home Loan. Different banks come with varying criteria for eligibility. Here are a few common factors you have to look out for.


·         Credit score, current debt, and total income: Examining your income, credit score, and current debt obligations alongside your total income are one way to identify whether you pass the eligibility criteria or not. Banks take into account a debt-to-income ratio of around 40%. This ratio should include all credit and loan obligations. If you are creditworthy, according to the lender’s judgment, you get a LAP that based on the present market value of your property. Getting a LAP against a self-owned plot of land is also easy.


·         Problems obstructing your eligibility: The tenure of these loans can go right up to 20 years while the interest rates start from 8.85% (as per current market rate). Getting a LAP can be challenging with a low credit score. Also, if you are nearing retirement, your eligibility lasts until the number of years you are in service.


Getting the Best Loan Against Property Offers means having a good credit score, drawing a salary that is capable enough to pay monthly EMIs (Equated Monthly Instalments), taking your age into consideration so that loan tenure is decided and taking into account any existing loans as this can bring down your overall eligibility. 


How to enhance your chances of passing the eligibility criteria?

Increasing your eligibility is easy when you follow these tips.

·         Showing rental income if you have rented out another house helps in increasing eligibility.

·         Checking your high-interest rate to make sure you are not paying more than the market value helps in enhancing eligibility. Make sure you correct the high-interest rate by rectifying the EMI to the prevalent rate.

·         Adding your spouse as a co-applicant, particularly if your spouse is helping to increase eligibility also proves beneficial.

·         Increasing your existing home tenure to get more loan amount in situations when the tenure of your current loan is less than the maximum tenure you are eligible for also helps in increasing eligibility.

·         Closing a short-term loan where you are paying a huge amount on EMIs is also a sure shot way of increasing your eligibility for a Loan Against Property.

·         Thinking about liquidating some assets so that any outstanding on a loan that is near full repayment is cleared is another good way to gain eligibility. This is especially helpful when your debt-to-income ratio does not meet the eligibility criteria for a LAP.


These are some of the ways you can enhance your eligibility criteria so that securing a LAP becomes stress-free and straightforward.


Risk factors associated with obtaining a Loan Against Property

When you need funds, LAP acts as a savior. However, there are certain risks involved too. Failing to repay the loan amount, you are at risk of losing the property. There are also no tax advantages on such kind of a loan. Considering all of these factors and having your Loan Against Property documents in order is imperative when applying for such a loan.


So although you can get a loan against the property on which you have an existing Home Loan, making sure you adhere to the protocol required to pass the eligibility criteria is imperative. Taking a moment to consider the repercussions and your own potential repayment capacity are also needed. When people rush unnecessarily and without careful planning, risking an asset for a comparatively smaller loan amount is common. Sitting down to compare the advantages and disadvantages before filing an application for a Loan Against Property is of utmost importance.

Also Read : 5 Benefits of Applying for a Home Loan Online


To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989. 


Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers. 

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About MyMoney Mantra Freshman   FinTech (Financial Technology)

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Joined APSense since, September 22nd, 2017, From New Delhi, India.

Created on May 15th 2018 06:23. Viewed 733 times.


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