Loan Against Property Eligibility Calculator

How is Loan Against Property Eligibility Calculated?

Last Updated 07th Dec 2016
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.
Loan Against Property Eligibility Calculator
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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 - Dec 2016
06th Dec 16 Mortgage loan firms may seek margin money on LAP if realty prices crash
Mortgage firms may start seeking margin money on loan against property as they expect a slowdown in real estate market and fall in property prices. LAP segment is vulnerable to defaults in the existing market, given prevailing high Loan to Value (LTV) ratios, large ticket size lending and presence of loan products that calculate borrower loan eligibility based on the estimated cash flows of borrowers. Lenders are expected to reduce LTV ratio for new LAP loan by 5 to 10 per cent to address the additional risks in the segment.
05th Dec 16 NBFCs faces rough phase in its LAP segment
Loan against property (LAP) segment of NBFCs has been facing growth crises post demonetisation. The growth rate of business is expected to fall to 15 to 20 percent in this financial year as compared to 22 to 24 percent two years ago. CRISIL, leading credit rating company prospects an increase in loan delinquencies to 2.7 percent in March, 2017 as compared to 1.9 percent a year ago.
18th Nov 16 Loan against property likely to badly hit due to cash ban
Loan against property is expected to be adversely hit in the short term, due to the current demonetisation drive. Demonetisation has led to disruptions in loan collection cycles, which is expected to result in a rise in overdues. Loan against property has emerged as a profitable segment for banks and NBFCs, whose loan books have grown remarkably in recent financial year.
11th Nov 16 Loan against property will see asset quality pressure in near future, said CRISIL
CRISIL, in its sector analysis, has said that loan against property will see more pressure in future. The numbers of delinquencies were already rising but due to an elongation of time to liquidate the property and fall in resale prices of property, the stress for the financers will increase further in coming time.
04th Nov 16 Citibank loan against property rates reduced from 1st November, 2016
Citibank has reduced its loan against property rates for self employed customers with capital invested of upto Rs. 5 crores. The revised loan against property interest rate ranges from 9.50 percent to 10.25 percent depending upon loan amount. The floating rates are benchmarked to 3 month MCLR Base rate of Citibank. The borrower can also avail flexi overdraft facility with this loan. The new rates will be effective from 1st November, 2016.
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