Loan Against Property Eligibility Calculator

How is Loan Against Property Eligibility Calculated?

Last Updated 29th Apr 2017
The loan amount that you can borrow against your property is calculated based on four factors:
  • Market value of property – the approximate worth of the property that you are giving as security subject to eligibility criteria as described below. You may be eligible for a maximum of 75% of the value of the property.
  • EMI that you can pay - the amount of money that you can pay every month towards loan repayment after meeting other expenses and paying your other EMI’s.
  • Loan tenure - longer the loan tenure, higher the eligibility. Property loan tenure in India ranges from 5 years to 18 years.
  • Interest rate - higher the rate of interest, lower the loan you will be eligible for.
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Loan Against Property Eligibility Criteria, FAQ's and Facts

What types of property can be accepted as security for getting loan against property?

  • Residential property and commercial property are the most eligible securities for loan against property.
  • Some banks also lend against industrial property in some areas.
  • Banks can lend against self occupied property, rented out property and even vacant property. However, interest rates on loan against vacant property may be higher than those on self occupied property.
  • Most banks would insist upon a clear and marketable title with full property chain.
  • Property offered as security must be located within municipal limits and must have been constructed as per the approved map plan.
  • No other bank or individual should have any claim on the property.

What types of property are not eligible as security for loan against property?

  • Banks do not give loans against agricultural land. Only crop loans can be availed against agricultural land.
  • Vacant or unused land is not eligible to be offered as a security for availing loan.
  • Buildings and property located in gram panchayat areas, lal dora areas and unauthorized areas are not accepted as security by most banks.
  • Property bought on power of attorney (PoA) cannot be offered as security for loans in most parts of India.
  • Property with broken chain in the title documents is typically not accepted.
  • Very small properties (less than 600 sq ft in size) are mostly not eligible as security.

How do banks value the property when deciding eligibility for loan against it?

  • An independent valuer appointed by the bank would visit the property, take its measurements and check whether the construction is as per the approved map plan or not.
  • The valuers would base the value on current prevalent property prices in the locality, area of the property in square meters or square feet, age of the property and its condition.
  • Note that the value is not related to the circle rate or ready reckoner rates as these may not always be in line with the market rates.
  • For higher ticket size loans (Rs. 1 cr and above), banks may get valuation reports from two independent valuers and take an average of the two to arrive at value for the purpose of calculating maximum loan eligibility based on LTV.

Why does loan against property eligibility depend upon income?

  • Loan servicing capability refers to the EMI you are capable of paying after meeting living expenses based on your standard of living.
  • The maximum EMI is limited to the surplus available after meeting essential and lifestyle expenses like those on food, travel, entertainment, family, clothing, medical treatment and similar such expenses.
  • For the purpose of determining loan eligibility, most banks consider maximum EMI paying capacity as 60% to 70% of the net monthly income after taxes and deductions.

How does eligibility calculator calculate eligibility in case of businessmen?

  • Income of business concerns such as companies, partnerships and proprietorships is taken as eligible income. We can also add non cash expenses such as depreciation to arrive at eligible income and increase loan amount eligibility.
  • To be eligible, the business must be registered and at least three years of income tax returns must be available.
  • It is possible to add income from other sources like rent and interest to help increase eligibility.

are the various types of income that can be added to calculate loan against property eligibility?

  • Any regular income that is supported by documents is eligible to be considered for the purpose of determining eligibility using the loan against property calculator.
  • Examples include income from salary, business, profession, interest, teaching, royalty, rent and fees. In some cases bonuses and sales incentives may also be added to income. However, reimbursements, income from shares, capital gains and undocumented income cannot be considered.
  • The income must be supported by income tax return and Form16 or Form 16A.

Loan Against Property Eligibility Documents

Property Documents Required for Loan Against Property
Salaried Self Employed
Registered Sale Deed/ Conveyance/ Lease Deed
Past Sale Deeds Chain (each transaction in respect of this property since first allotment)
Latest House Tax Return/ Receipt
Approved Building Plan from Municipal Corporation Case To Case

Loan Against Property Eligibility of All Banks

Loan Against Property Eligibility Calculator News - Apr 2017
17th Apr 17 Indiabulls plans to restructure its real estate business
According to sources, Indiabulls Real Estate’s board is planning to restructure their real estate business by de- merging their commercial and residential segments into separate companies. The restructuring would help the company concentrate on its key business segments individually and improve its competitive advantage in the real estate sector in the country.
06th Apr 17 Lenders manage to sell bad loans of Rs. 35,000 crore
Leading bankers are estimated to have sold nonperforming assets of Rs. 35,000 crore to various Asset Reconstruction companies during FY17 in a bid to reduce the burden of bad loans and clean their balance sheets. The bad loans were sold on 15-85 ratio, where 15 percent is paid in cash terms and 85 percent is paid in securities.
05th Apr 17 Bank loans to real estate sector shrunk by 50 percent in India in 2016
Report by Knight Frank India has highlighted that the bank loans to Indian real estate sector of sector’s institutional funding requirement have declined to 24 percent in 2016 as compared to 57 percent in 2010. The decline has been caused due to rising NPAs, high risk provisioning and mounting losses in the real estate sector.
31st Mar 17 CIBIL to now help borrowers get best loans
The oldest credit information company TransUnion CIBIL will now offer best loans to the borrowers based on their credit scores and history. CIBIL has started CIBIL Marketplace, a formal way of helping borrowers in securing best loans. CIBIL has tied up with 13 banks to provide retail loans including personal loan, business loan, loan against property, credit card and home loan. With CIBIL Marketplace, CIBIL has created a possible competition for online retail loan aggregators or marketplaces.
29th Mar 17 GST to be levied on rents and EMI on under construction property from 1st July, 2017
Finance Minister has made an announcement that GST will be applicable on leasing of lands, renting of buildings as well on EMIs paid on loans taken for the purchase of under construction property. However, sale proceeds of a housing property has been kept out of GST tax regime. Banking expert at HDFC Bank has pointed told that GST will be applied only on the sale of under construction property as the sale of completed property is not treated as goods and services under GST rules. The new indirect tax regime will be effective from 1st July, 2017.
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