Loan Against Property Eligibility Calculator

How is Loan Against Property Eligibility Calculated?

Last Updated 26th Mar 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 - Mar 2017
17th Mar 17 Ahead of merger, loan processing at associate banks may get delayed
State Bank of India is in process of completion of merger with its five associate banks on 1st April, 2017. As per bank sources, loan processing and banking services at associate banks may get disrupted during end of March, 2017. SBI has notified the associate banks to complete disbursements of existing loans across various segments including loan against property, home loan and personal loans by 25th March, 2017.
17th Mar 17 Developers turn to build value homes to beat the slowdown in real estate
Realty developers are rapidly shifting their focus from building luxury housing projects to affordable housing projects in order maintain their sales growth and reduce the impact of declining sales volume in other segments of the property market. As per a latest Cushman and Wakefield report, the shift has been witnessed after the government announced favourable guidelines for developers building affordable house units. Some of these guidelines include easing access of loans from banks such as SBI, PNB and HDFC Bank, grant of infrastructural status to affordable housing and reintroduction of RERA Act.
17th Mar 17 Affordable housing emerges as the focus area for real estate developers
Government of India, in Union Budget 2017 announced various measures to encourage real estate developers operating in the Affordable Housing segment. Some of these measures include grant of infrastructure status to affordable housing, reintroduction of Real Estate Regulations Act and improving availability of housing loans from banks. As a result of these announcements, developers are shifting their focus from building luxury house units to affordable house units to drive sales and mitigate the impact of the overall slowdown in the property market.
11th Mar 17 Syndicate Bank to auction land of GVK group to recover outstanding loans
Syndicate Bank has announced the auction of land owned by GVK Group in GVK Perambular SEZ Pvt Ltd in Tamil Nadu as a part of recovery of its outstanding loans of Rs. 175 crore. The bank has also issued NOC to HDFC Ltd for ceding on the mortgaged property. HDFC Ltd has also disbursed loans of Rs. 1,075 crore to GVK Group.
10th Mar 17 PNB plans to sell bad loans of Rs. 1,800 crore to ARC in March, 2017
Punjab National Bank has identified non- performing loan accounts of Rs. 1,800 across various loan segments such as property loan, personal loan and business loans and is planning to sell these assets to Asset Reconstruction Companies (ARCs) in March 2017. The bank had recovered Rs. 1,600 crore by selling bad debts to ARCs during 2016- 17. PNB has also managed to recover dues of Rs. 937 crore in cash after its asset quality management exercise during the third quarter of FY17.
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