Top Factors That Affect Loan Against Property Eligibility

Loan Against Property: Factors That Affect Loan Against Property Eligibility

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Loan Against Property

Loans against property are a type of secured loan that has grown in popularity. These are multi-purpose loans that individuals can obtain from banks and lending institutions by pledging existing assets as security. You can borrow up to 40-70 percent of the market value, depending on the property’s worth and the lender’s policy. If you have all of the relevant documentation, both residential and commercial properties can be used as collateral.

Borrowers can choose the loan term based on their ability to repay the loan. There are a number of factors that influence the amount of money you can borrow against your home’s equity. Before settling on your loan against property tenure, examine the following points. If you’re thinking about taking out a mortgage against your home, there are a few things to consider.

Loan Amount

The loan amount you require has a direct impact on the loan’s term. Typically, the longer the loan term, the greater the loan amount. Longer terms make it easier to repay loans because the EMIs are lower because the loan amount is spread out over a longer period, easing the stress of repayment on your monthly budget.

A longer term also boosts your chances of being approved for a larger loan against your home. You can use online calculators to determine your eligibility and the optimal loan term for your needs.

Credit Score

Your credit score is the most important aspect that will determine not just the interest rates you receive on your LAP loan, but also your loan against property eligibility. In order to qualify for competitive interest rates, you should have a credit score of at least 750.

If you have a low credit score, lenders may consider you a high-risk borrower and charge you a higher interest rate. Furthermore, if your credit score is much below the required threshold, your loan application may be turned down.

Profile of a Loan Applicant

Another important consideration for your loan against property interest rates is your borrower profile. Your age, whether you are salaried or self-employed, where you live, your monthly income, and other factors will all influence the interest rate you are charged.

For example, if you are a senior citizen approaching retirement, the lender may charge you a greater interest rate than someone who is young and fresh to the service industry.

Furthermore, the source of your money has a role. If your income is sporadic and variable, lenders may be hesitant to extend a loan against property or demand higher interest rates. Similarly, because of their stable salaries, salaried individuals may be charged a reduced interest rate, but self-employed applicants may be charged a higher rate.

Documentation of your leveraged asset

Before disbursing the loan, financial lenders will almost certainly check whether you have sufficient documentation for the property, such as permissions from local organizations, environmental clearances, building plans, and so on. If there is any legal loophole or documentation difference, your prospects of securing the loan are nearly nil.

Leveraged property insurance

If the property you’re using as collateral for the loan is properly insured, you’ll have an edge in your loan application. It would increase the level of trust between the lender and the borrower since lenders would be more confident that the property would not become a non-performing asset in the future.

Previous Loan Application Rejection

Previously rejected loan applications are kept on file by financial institutions and credit brokers. If your loan is denied, it will show up on your credit report, lowering your chances of securing a loan. As a result, it’s critical that you only apply for loans when you really need them and not for any reason at all.

The Borrower’s Age

The age of the borrower has a significant impact on his or her ability to repay the debt. If the borrower has achieved or will reach retirement age in the next few years, your loan application is likely to be rejected. In such cases, you can always look for loans with a shorter term, but this will result in higher EMIs.


Longer terms spread your payments out over a longer period of time, resulting in lower EMIs. If you have a modest income, you can always choose lengthier tenures, which will increase your chances of success.

The regularity of income tax returns

When a borrower is self-employed, the lender would typically request the most recent three years of income tax returns. In the case of insufficient ITRs, even if your income is sufficient, the lender will not be able to verify your regular flow of income, lowering your chances of approval.

Applying for a loan against property with Home First Finance Company is simple, quick, and painless. Plus, there’s more. The entire procedure can be conducted from the convenience of your own home. So, what are you waiting for? Visit our website to apply for a HomeFirst loan secured by real estate today!

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Your home loan will be processed in 2 steps:

  1. You receive the approval of your home loan.
  2. You sign the loan agreement papers and complete other necessary documentation. The loan amount is thereafter paid directly to the builder by Home First Finance Company.

Loan decisions are made in less than a week. You will receive an SMS on your registered mobile number as soon as we make a decision.

HomeFirst does not charge any prepayment fees. This applies to both partial and full repayments. In fact, we have a special Auto-Prepay feature to facilitate this process for you.

HomeFirst offers loan tenures between 1 year to 25 years. If you opt for a longer tenure, you can get the advantage of a lower EMI each month.

HomeFirst can provide finance up to 90% of the property value. The balance has to be arranged by you from other sources. Please note: 90% financing is only available for loans amounting to less than Rs. 30 lakhs.

All co-owners of the property have to be co-applicants to the loan. A person who is not a co-owner can also become a co-applicant to the loan.

During the construction phase, HomeFirst will disburse funds to the builder on your behalf. These will be based on payment requests made by the builder as per the construction schedule.

HomeFirst will charge interest only on the amount disbursed as loan during the construction phase. In this period, interest is charged only on the disbursed loan amount. For example, if you have a sanctioned loan of Rs 10 lakhs, but the property is under construction and we have disbursed only Rs 4 lakhs, you will be charged interest only on 4 lakhs. These interest payments are referred to as pre-EMI interest payments.

EMI payments will start only after completion of the project and registration of the property.

All cheques to HomeFirst should be written out in favor of ‘Home First Finance Company India Limited’.

In the event of an unfortunate incident, home loan insurance will help you or your family pay off the home loan. This ensures that the burden does not suddenly fall upon family members at a bad time.

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