Loan Against Property Eligibility Criteria

The basic eligibility criteria for loan against property are age, nature of employment, income and loan amount to property value. By meeting the required loan against property eligibility of the lender, you can avail of LAP up to 15 crore for 15 years at interest rate ranging from 7.25% to 8.00% p.a. For fast approval & disbursal, attach the required loan against property documents with your LAP application.

What is Loan Against Property?

If you need funds to cater to a personal or business emergency, a personal loan is an ideal option. However, personal loans have limitations, especially when your requirements are huge. Under such circumstances, a Loan Against Property is a better alternative. Both personal loan and Loan Against Property are similar in many ways, but they differ a lot, as well. The eligibility criteria for a personal loan are different from that of a Loan Against Property. They differ in many other ways, too.

Loan Against Property Vs Personal Loans

Before we proceed with discussing the differences between the two, let us compare the similarities:

Both personal loans and loans against property help the borrower to cater to personal and business emergencies. These requirements can include medical treatment, marriage or educational expenses, and so on. From the business angle, these loans help you to tide over immediate working capital requirements or purchase of a long-term business asset.

Banks and financial institutions do not seek the reasons for applying for personal loans and loans against property. The lenders do not have any issues as long as the end-use of the loan is not for speculative purposes.

Here are the aspects in which the Loan Against Property differs from personal loan:
  • Personal loans are unsecured loans, whereas a Loan Against Property is a secured one
  • Personal loan has smaller exposure limits when compared to Loan Against Property
  • The eligibility norms for a personal loan differ from that of a Loan Against Property
  • The CIBIL score requirement for a Loan Against Property is not as high as it is for a personal loan
  • Usually, personal loans are not available in joint names, whereas borrowers can apply jointly for a Loan Against Property.
  • The personal loan is always a term loan, whereas a Loan Against Property can be in the form of an overdraft facility.
  • Personal loans are available for short tenures up to 60 months, whereas a Loan Against Property can have a mandate extending up to 20 years.
  • The rate of interest on a personal loan is considerably higher than that applies to Loan Against Property.
  • Compared to loans against property, a personal loan has a shorter TAT (turn-around-time)
A personal loan is ideal for meeting small requirements, whereas a Loan Against Property caters to more significant needs.

Loan Against Property - General Eligibility Norms

ITR is one of the crucial documents required to apply for a loan against property. If you cannot furnish any documents (including ITR) deemed necessary by the lender for LAP, your loan application might get rejected.

ITR (Income Tax Return) is a form in which taxpayers provide information regarding their income and applicable taxes to the Income Tax Department. ITR is important for availing of a LAP. However, if your loan requirement is not too high, some private lenders and Non-Banking Financial Companies (NBFCs) may offer loan against property without ITR.

  • A Loan Against Property has a minimum and maximum age requirement. Usually, the minimum age requirement is around 21 years, with the maximum being 65 years. It depends on the lending institution.
  • Generally, both self-employed individuals and salaried persons are eligible for a Loan Against Property. The standard requirement is that the applicant should have a regular source of income.
  • Joint applications are permissible in a Loan Against Property. The lending institution can accept the income of the co-applicants for arriving at the eligibility.
  • The applicant should have unencumbered property in their name
  • The property can be residential, commercial, or industrial. Agricultural land is not acceptable as security for the loan.
  • Many banks stipulate that the property should either be vacant or self-occupied. Some of the banks do not consider a property that is let out on rent or lease to third parties.
  • Some lending institutions sanction loan against vacant residential plots
  • The margin on Loan Against Property can be 10% to 50% of the market value of the property

Loan Against Property - Advantages

  • It provides you with an opportunity to get a lump sum amount to cater to personal or business needs.
  • The Loan Against Property is cheaper when compared to a personal loan or an advance against the credit card.
  • It is useful when the requirements are high
  • The eligibility criteria for applying to a Loan Against Property are comfortable
  • One does not need an excellent credit rating to be eligible for a Loan Against Property
  • The Loan Against Property has an extended repayment tenure. Therefore, it is a convenient liability in many ways.