Home Loan

Here’s a list of Complete Eligibility Criteria For a Loan Against Your Property


Often one finds oneself in a problematic situation. A cash crunch or starting up a new business can put you in a tricky place. Even funding your children’s education can make you need funds.

At times like these, you might want to get a loan. One of the most popular kinds of loans is a loan against property. In such a case, one takes a loan by keeping their property as collateral.

Collateral here means security to the lender. It gives the lender a sense of protection. The property would remain as collateral until the whole loan is repaid. This makes taking and giving out loans easier and safer. 

What is meant by Loan Against Property?

In simple words, a loan against property means a loan secured by any property that comes under your ownership. You can then repay the loan in monthly instalments. These instalments are called EMIs (Equated Monthly Installments). The amount of EMIs is agreed upon for a fixed tenure.

The rate of interest is also fixed when you enter the loan contract. The property given as collateral can be any house, land or commercial premises that you own. The value of your property determines the loan amount you can borrow.

Where can Loan Against Property be Used?

A loan against property can be used in a variety of situations. With such a loan you can take a loan of a big amount. The amount of the loan depends upon the value of your property. The major purposes you can take up such a loan are as follows:

  • To fund higher education programs.
  • Growth and expansion of business.
  • Consolidation of high-interest debts.
  • Renovation expenses of personal or commercial premises.
  • To fund a wedding.
  • To finance the medical expenses of a family member.

What is the process for getting a Loan Against Property?

After applying for a Loan Against Property, the lender will get your property assessed. This could be done directly by the lender. The lender might also get an expert valuer involved. The assessment involves many factors like age of property, location, condition, and ownership verification. The value arrived at could be different than the market value of your property.

Also, the loan offered to you would not be for the whole amount of the valuation. Usually, lenders provide loans up to a certain percentage of the value of the property. This is called Loan-To-Value (LTV). This can be around 70-80% of the value.

To illustrate, the value ascertained is Rs. 80 lakhs. The lender gives out an LTV of 75%. You get a loan of Rs. 60 lakhs. 

Advantages of a Loan Against Property

There are several benefits derived from a loan against property. Especially if the loan is taken through a renowned brand like Piramal Finance. Some of them are stated below.

  • Simple eligibility needs
  • Minimal documentation needed
  • Low loan rates
  • Transparent processing with no additional fees
  • Up to 15 years of additional tenure 
  • Quick sanctions and smooth processes

What are the Eligibility Criteria for Loan Against Property?

The usual loan against property eligibility criteria for a loan against property is given below:

For a Salaried Employee

Age Requirement

  • Minimum Age: 21 years
  • Maximum Age:A government employee – 70 yrs Others – 62 yrs

Employment Type

Individuals working in a:

  • Government institution
  • Public Sector Unit
  • Private Firm
  • Multi-National Companies
  • Partnership firm / Limited Liability Partnership
  • Organisations run by Trusts, NGOs or Society

Documents Required

  • Income Tax Returns for the last two financial years
  • KYC Document
  • Form 16
  • Last 6 months and salary slips of Bank Statements
  • Documentation related to property is kept as collateral.

For Self-Employed

Age Required

  • Minimum Age Requirement – 23 years
  • Maximum Age Requirement – 70 years

Type of Employment

  • Professionals: Doctor, CA and Architect.
  • Others: Self Employed Other than Professionals, Business Owners, Partnership Firms’ Partners and Promoter/Directors of private and public limited companies.

Documents Required

  • Income Tax Return of the last two years
  • Financials audited by CA
  • KYC Document
  • Form 16
  • Last six months’ bank statements
  • Documentation related to property is kept as collateral.

Tricks to Keep Loan Against Property Interest Rates Low

Now that you know the loan against property eligibility criteria, let’s focus on the loan against a property interest rate. You would aim to keep the loan against property interest rates as low as possible. For this you can use the following tricks:

Reduce the Principal

For unforeseen needs, you might want to borrow a little bit more money than you need. While doing so it is important to avoid going overboard. Larger interest rates may be the outcome of borrowing more money than you are qualified for. The lender may see your application as having a higher chance of default. So keep your loan amount low.

Select the Appropriate Interest.

Consider carefully whether to choose a fixed or floating interest rate for your loan. The secret to deciding between the two is to make the best predictions about loan rates in the future. Floating-interest loans have no prepayment fees. So you save more money when you choose to make prepayments.

Make the Appropriate Property Pledges

You want to obtain reduced interest rates and a greater chance of getting your loan approved. This can be done by pledging a high-value home in an expensive region. However, the lender would not provide you with favourable conditions if the property is old, poorly kept, or situated in an undesirable area.

Verify Your Eligibility in Advance

Making note of your lender’s loan against property eligibility needs will help you avoid application rejection. To ensure a smooth application process, learn about the loan against property paperwork needed after determining your eligibility and have them prepared.

The Bottom Line

So what are you waiting for? Ready your documents. Evaluate your property. Get the best loans out there.

To know more about the financial world and how to get the best loans, visit Piramal Finance. Piramal Finance is an Indian financial service. They provide all kinds of loans. They also provide answers to all your loan-related questions. Check out their website for all your finance needs.