Stepping Closer to your Dream Home: Crack the Mortgage Loan Eligibility Code

The current credit industry is driven by secured loans, such as loans against property because they provide substantial amounts of loans at low property loan interest rate with extended repayment terms. Borrowers can use the sanctioned amount for various debts. However, before applying, the borrower must quickly check the mortgage loan eligibility requirements. This will help them determine the approximate loan amount they might be eligible for and plan their finances accordingly. 

Loan against property eligibility criteria 

Borrowers must meet the following eligibility requirements in order to avail Loan against property. Anyone unable to meet the standards below will not be eligible for the loan amount and their loan application will also be rejected. Hence, it is necessary to know these parameters before applying for a credit to avoid any possible hassles.

Eligibility requirements for salaried employees 

The mortgage loan eligibility for salaried applicants is as follows:

• Borrowers must be Indian citizens
• Candidates should be between 23 to 62 years of age
• The person must be employed by a reputed MNC or public/private enterprise
• Applicants must have three years of experience

Eligibility requirements for self-employed applicants

The mortgage loan eligibility for self-employed applicants is as follows:

• The person must be an Indian citizen
• Applicants must fall within the age range of 25 to 70 years
• Anyone who is self-employed and pays income tax can opt for this credit line
• People must prove a reliable source of income

The valuation of the property being mortgaged and the creditworthiness of the applicant also play a role in their eligibility. Anyone applying for a property secured loan must have a decent CIBIL score. It is important to note that each lender has different eligibility requirements.

Along with understanding what a home equity loan is and who it applies to, you also need to be aware of the necessary paperwork.

Documents required to apply for a loan against property

Here is a list of paperwork that a borrower must have on hand before applying for a mortgage loan:

• Identity documentation like Aadhaar Card, PAN Card, Voter ID Card, Passport etc.
• Address verification (passport, driver’s licence, etc.)
• Bank statements for the last three months for salaried individuals
• bank statements for six months (if the person is self-employed)
• IT return (for salaried applicants)
• Property documents, including sale deeds, registration certificates, tax documents and insurance, among others.
• Three most recent pay slips (for salaried applicants)

The list of required documents can vary from one lender to another; lenders may require additional paperwork.

Factors that affect mortgage loan eligibility 

The factors that determine a borrower’s eligibility for a loan against property are as follows:

• Age of the applicant: The age of the borrower is a key factor in assessing his ability to repay the loan. Lenders are usually leery of borrowers nearing retirement. In these circumstances, lenders provide the loan amount with a reduced repayment period, which increases the EMI.
• Borrower’s income: Applicants need a reliable source of income. If a person cannot prove proper income, the loan amount is less likely to be granted to them. The borrower’s ability to repay the loan amount within the term of the loan depends on the level of stability of his income.
• Credit score: Credit score is a significant aspect in determining loan eligibility. A credit score shows the creditworthiness of a borrower. The ability to get a loan is limited if he has a bad credit score. Before starting the loan process, borrowers need to understand how a credit score affects eligibility for home equity loans.
• Insufficient property records: Paperwork related to real estate needs to be organised. Lenders carefully review the documentation before approving the loan amount. In case of any discrepancies in the documents, the loan application will be rejected.

Additionally, applicants can use the loan against property eligibility calculator to see if they are qualified to avail the loan option. 

How to increase the loan against property eligibility in India?

• You can follow these tips to increase your chances of getting a loan against property:
• Build your credit score by paying your current debts on time to maintain a healthy credit rating. You will be able to apply for any form of loan with a score of at least 750.
• Keep FOIR below 40%. FOIR, or fixed debt-to-income ratio, measures how much monthly debt is compared to monthly income. If this number is above 40%, it means that more than 40% of your income is used to pay off debt. The LAP application at that time may be rejected under such circumstances. 
• Longer tenor is preferable if you want to keep your loan EMI low. Lenders are more confident that you will be able to repay your loan without falling when your EMIs are low.

Features of LAP

Here are some of the salient features of opting for a loan against property:

• A LAP is a type of secured loan where the borrower’s home or other property is used as the primary security for the amount provided by the lending institution. The lending institution reserves the right to sell the mortgaged property to recover unpaid debts in cases where the borrower defaults on payment requirements.
• Due to the secured nature of the property loan, the eligibility requirements are very simple and the associated interest rates are kept at an affordable level. Lenders assess the current market value of the borrower’s assets to determine the maximum principal amount of the loan. .
• To access this form of credit, individuals are required to provide the necessary property documents, as required for mortgage loans. In general, the loan against the property does not come with any restrictions on its end use, which gives borrowers the flexibility to use the principal for various purposes without interference from the lender.

In this regard, existing customers can check pre-approved offers from leading NBFCs on financial products including home loans and property loans. These offers speed up the entire loan application process and cut down the documentation time. OPne can assess his or her pre-approved offers by entering their names and contact information.

In conclusion, loan against property is a successful fundraising method that helps manage big ticket expenses. However, to really benefit from this secured credit option, borrowers must meet the mortgage loan eligibility requirements. Fulfilling all these parameters also helps applicants secure the lowest mortgage loan interest rates.