A loan against property is a viable option for borrowers seeking substantial loan amounts at affordable repayment options. However, before opting for this credit, individuals need to consider a few factors to make the most of it.

Factors to consider while opting for a loan against property

A loan against property does not entail any end-use restrictions. Therefore, individuals can utilise the fund for any considerable financial obligations. However, following are some factors that they need to keep in mind to ensure better debt management.

• Loan corpus

Conventionally, a loan against property is available in large volume. However, it primarily depends on the LTV a lender offers. Usually, the LTV on this credit ranges up to 75%. Moreover, selected financial institutions offer high-value loans at an affordable interest rate.

• Eligibility criteria

The loan against property eligibility criteria is generally easy-to-meet due to presence of high-stake collateral. It includes the following -

1. Applicants must be a residing Indian citizen.

2. Should be aged between 28 years and 58 years (salaried) and from 25 years to 70 years (self-employed).

3. Must have a steady monthly income.

4. Salaried individuals should be employed at an MNC or public or private organisation.

Note that reputed financial institutions do not provide loan against property without income proof.

• Documentation

Following is the list of loan against property documents required while applying for this advance.

• KYC

• Income proof

• Bank account statements

• Property documents

Besides, lenders may also ask for additional documents as and when required.

• Property type

The property type also plays a vital role in loan against property eligibility and interest rates. Usually, individuals can pledge the following property to secure this loan.

1. Self-occupied residential property

2. Let out residential property

3. Self-occupied commercial property

4. Let out commercial property

However, the LTV and interest rate vary with property type, location, age, etc.

• Interest rates

Since you pledge property to avail this loan, the lending risk reduces drastically. Therefore, as a reward, lenders enforce lower rates when compared to unsecured loans. However, they can also use a loan against property interest rate calculator and compare different lenders for better deals.

These are some of the most crucial factors of loan against property that individuals need to consider before applying. Moreover, they should also utilise a loan against property EMI calculator to ensure a smooth repayment.