Loan Against Property Eligibility Calculator

How is Loan Against Property Eligibility Calculated?

Last Updated 24th Feb 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 - Feb 2017
22nd Feb 17 Housing sales and launches dips by 31 and 40 percent in third quarter of FY17
A report by NDTV Profit has highlighted a fall in housing sales and launch of new housing units by 31 and 40 percent respectively during the third quarter of FY17 in eight major realty centres. The sale of new houses dropped to 26,718 units during third quarter as compared to 38,450 units for the corresponding period a year ago. Similarly, the launch of new home units dropped to 16,636 units in December, 2016 as compared to 27,696 units a year ago.
17th Feb 17 PNB Housing Finance launches EMI step up plan for self employed loan borrowers
PNB Housing Finance has launched a new EMI scheme called EMI Step up Plan for self employed loan borrowers across home loan and loan against property segment. Under the scheme, borrowers who have taken loan of Rs. 50 lakh and above can opt to pay a lower EMI initially and can gradually increase the EMI to match an increase in their income. This is expected to ease the loan burden on borrowers in the initial years of their career.
16th Feb 17 Private equity investment in India realty sector at nine year high in 2016
A report released by Cushman and Wakefield has highlighted the growth of private equity investment in Indian realty sector at its nine year high in 2016. Private equity investment grew by 26 percent and reached at 5.97 billion dollars crore in 2016 on a year on year basis. As per the report, residential assets remained the most preferential asset class witnessing the investment of 3.1 billion dollars during the year. Investment in the other segment such as commercial office assets also witnessed an impressive investment of 850 million dollars.
15th Feb 17 Real estate sector to see healthy competition and improved liquidity in future
Finance Minister accorded the status of infrastructure to the affordable housing segment in Union Budget 2017. Expert at Business Today expect to see a healthy growth in the realty sector with easier access to loans and improved liquidity position. He also opined that the grant is likely to attract more private developers into the affordable housing segment, which will lead to a healthier competition amongst the real estate companies.
13th Feb 17 Real estate to get a makeover under new law
Government has launched RERA, a new regulatory and development act for real estate companies in India. The act is aimed at organising the real estate sector while maintaining a level of transparency. Real estate developers believe that the Act will improve accountability and transparency in the operations of real estate companies and hence, attract more foreign investment in the sector.
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