Loan Against Property Calculator India Sep 2020

The following factors are considered by banks to estimate your mortgage loan eligibility:

Minimum and Maximum Age	18 to 70 years However, some banks also give mortgage loan at the age of 18 years to self employed and salaried customers
Net Monthly Income	Net monthly income of salaried applicants should be ₹ 40,000 or more Minimum annual income of self employed should be ₹ 3 Lakh and above
Loan Tenure	Maximum loan tenure up to 20 years
Interest Rate	7.75% to 15.15% Interest rates varies with the property type. Generally, interest rates on loans taken against residential properties are lower than loans taken against commercial or industrial properties
Employment history	For salaried applicants, minimum work experience of 3 years is required For self employed, business existence of minimum 5 years and ITR of 3 years is required Note: Business with net investment up to ₹ 5 Cr may be eligible for concessional rate of interest on LAP under priority sector lending
LTV	Banks typically give mortgage loan at LTV of 40% to 75% The LTV ratio– differs by type of property Loan against industrial property – 60% Loan against residential property – 75% Loan against commercial property – 75% Banks give loan based on market value or registered value of the property, whichever is lower
CIBIL score	CIBIL score of 650 and above is considered as a minimum cut off score to be eligible for a CIBIL Score
Property approval and documents	The builder and property against which you are taking loan should be approved by banks 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)

Apply for longer loan tenure: Your Loan against property EMI depends upon the tenure of the loan. Higher the loan tenure, higher will be your loan amount eligibility. If your loan eligibility for a 10 year loan is Rs 15 lakh, you may evaluate the option of taking 15 years loan to increase your loan amount eligibility. You can also check your loan eligibility with MyLoanCare Property Loan Calculator.

Prepay your existing loan completely: If you have an existing loan near to closure, it might help to pay back the loan to increase your monthly savings and enhance your loan eligibility.

Add any co-applicant (Spouse or parents): If you include your spouse or parents as loan co- applicant, then your overall loan eligibility will go up as more income is available to support loan repayment. Please ensure that the applicant is earning, has a strong credit track record and can produce credit and income proofs, as required.

Add Rental Income: Some banks are also open to consider your rental income as a part of your net income to calculate your loan eligibility. Hence, it is advisable to disclose and report your rental income if you want the highest loan amount.

Maintain good credit score: Before applying for loan against property, check out your CIBIL score. Look for errors, if any. Do not apply for a loan with various lenders to get a loan quickly. Pay all your credit card bills and loan EMI on time or you can also do advance payment to improve your CIBIL score and your eligibility for a loan.

Choose the property to be mortgaged wisely: Banks view residential property as the safest and hence, offer the highest LTV on such properties. If you have an option, always try to avail a loan against a residential property to get highest loan and lowest interest rate. Commercial property mortgage tend to get you lower loan amount eligibility and higher interest rate, as perceived risk is high. Only a few banks offer loan against industrial property and that too at lower LTV and higher interest rate.

Illustration – Mr. A is 30 years old and needs a loan to wants to expand his business. He is willing to mortgage his commercial property with a market value of ₹ 60 Lakh. His net income is ₹ 50,000 per month and he has no other fixed obligations. Banks will calculate Mr. A’s loan amount eligibility based on his age, net income and his fixed expenses obligations as a per cent of his net income. Based on his eligibility calculation, various banks can offer different interest rates to Mr. A with different EMIs. He should choose the bank which offers the highest loan amount eligibility with lowest interest rate and lowest EMI.

Bank	Loan Amount Eligibility	Interest Rate	EMI
SBI	₹ 44.32 Lakh for 15 years	8.80%	₹ 44,425
HDFC	₹ 44.57 Lakh for 15 years	8.75%	₹ 44,547
ICICI Bank	₹ 43.82 Lakh for 15 years	8.90%	₹ 44,185
Axis Bank	₹ 37.14 Lakh for 15 years	10.50%	₹ 41,058
PNB Housing Finance	₹ 39.80 Lakh for 20 years	9.80%	₹ 37,878
DBS Bank	₹ 32.77 Lakh for 10 years	11.90%	₹ 46,831
DHFL	₹ 32.50 Lakh for 15 years	12.00%	₹ 39,005
IDBI Bank	₹ 38.24 Lakh for 15 years	10.20%	₹ 41,557
IDFC Bank	₹ 33.05 Lakh for 15 years	11.80%	₹ 39,242
Indiabulls	₹ 31.43 Lakh for 10 years	10.50%	₹ 42,408

• As you can see in the above table, loan amount eligibility differs for different banks. Hence, it is extremely important to compare the eligibility terms and interest rates of different banks before choosing the bank to borrow from.
• Banks offering highest eligibility of ₹ 44.57 Lakh are HDFC.
• Minimum eligibility of ₹ 31.43 Lakh is offered by Indiabulls.
• EMI amount ranges from ₹ 37,878 to ₹ 46,831 at different interest rates offered by banks.

	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

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

The type of property that can be accepted as security to get loan against property are:

• 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.

✅Why does loan against property eligibility depend upon income?

The loan against property depends on income due to following reasons:

• 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.

✅Is CIBIL score required for loan against property?

Loan against property is a secured loan, as you submit your property as collateral. In case of a secured loan, credit score has a lower role to play as compared to its role in an unsecured loan. However, the credit score is still an important parameter that is required to get your loan application accepted.

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

The type of properties against which you can not avail mortgage loan are as following:

• 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?

Bank decides the loan against property eligibility by following these steps:

• 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 (₹ 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.

✅How does eligibility calculator calculate eligibility in case of businessmen?

The loan against property eligibility calculator calculates the eligibility for businessmen in following ways:

• 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.

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

You can add following incomes to calculate the 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.