What affect your chances of LAP (Loan against Property) Approval?by Tushar Singh Investment Banker
LAP Loan (loan against property) is a secured personal loan which enables you to get instant access to allows you funds in order to meet any type of general or personal financial requirement. that you have whether the requirement is personal or commercial in nature. The loan is offered after you mortgage your property either residential, commercial or industrial. if you mortgage a property which belongs to you. The amount of loan depends on the value and the condition of the property that you have mortgaged.
A loan against property has specified eligibility parameters and the following factors, forming a part of the eligibility criterion, affect your chances of availing the loan –
A loan against property has a minimum and a maximum age bracket and if you fall within this bracket can you avail the loan. The minimum age is 18 years whereas the maximum age is limited to 65 or 70 years. Moreover, your age also affects the loan repayment tenure. Loans against property allow repayment tenures of up to 20 years. However, if you are 60 or 65 years of age and the maximum repayment age is restricted to 75 years your repayment tenure at age 60 would be restricted to 15 years while at age 65 it would be 10 years. So, age not only determines your eligibility, but it also determines the repayment tenure of the loan.
There is also a minimum income criterion for availing the loan. If you are salaried your minimum net monthly income should be INR 40,000 and if you are self-employed an annual income of INR 3 lakhs and above is required. Your income also determines the amount of loan that you can receive. The loan is calculated in such a way that the EMI of the loan should not exceed a specified percentage of your monthly income. For instance, if the EMI should not exceed 40% of your monthly income and your monthly income is INR 50,000, the loan would be restricted to such an amount wherein the EMI amounts to a maximum of INR 20,000.
Type of property mortgaged
The Loan to Value (LTV) ratio of the loan amount depends on the type of property that you mortgaged. If you mortgage a commercial property you would be able to avail up to 60% of the property’s value as a loan. For residential property, the LTV is 75% and for industrial property, the maximum LTV is 70%. So, the type of property mortgaged would determine the loan quantum.
Your CIBIL score
To avail a loan against property you need a minimum CIBIL score of 650 or 700. If your score is below this level, the loan would not be approved. Moreover, your credit score also determines the loan amount and the loan interest rate charged by the lender. If you have a high credit score you can avail a higher amount of loan at lower rates of interests and vice-versa.
Stability of your occupation
Lenders also, look for a stable job or a continued business existence when approving your proposal for a loan against property. If frequent job changes have taken place or if your business is relatively new, you might not be allowed the loan.
So, these are the common factors which determine whether your loan against property would be approved or not. Bear these factors in mind when applying for the loan for a better understanding of the loan process.
Created on Jun 14th 2019 03:43. Viewed 203 times.