One type of home loan that is growing in popularity and demand is the loan against property. This is a unique type of home loan that allows consumers to leverage their property as a mortgage. 

The property can be a residential property or even one used for business purposes. 

The loan can be used for several purposes such as the expansion of business, a medical emergency, renovation or repairs of the home, wedding expenses, funding higher studies, and vacation plans.


Owning a property is not enough.

When considering a home loan against a property, it is important to understand that the loan against property eligibility criteria extends beyond mere ownership of a property. However, it is the first factor in the eligibility hierarchy. 

Several additional factors will influence outcomes when you apply for a loan against property. 


Here is a list of factors to consider: 

  1. Your Credit Score: Lenders will evaluate your credit history and creditworthiness before giving you any loan. Your ability to demonstrate that you practice positive borrowing will make a difference in the fate of your loan application. For instance, if you own a credit card and have honored all your payments on time, this demonstrates positive credit history.
  2. Income sources & employment history: Being able to demonstrate a continuous and stable pipeline of income via gainful employment or business ownership plays a key role in your ability to pay EMIs (Equated Monthly Installments) regularly.

    If you are a professional, the lender will review how long you stick to one employer. If there are too many switches at brief intervals, this might be considered a red flag. Typically, lenders tend to give loans to those who have been in their current employment for at least two years.

  3. Your age: Typically, lenders expect the loan to be paid back before a borrower completes age 60. Applying when one is older means the loan tenure will also reduce. So plan accordingly.

  4. Property Documents: Loans on properties that are free of legal disputes tend to be prioritized by lenders. This is because, in case of a loan default, they will be able to take over the property sans any hassles. You will need to furnish the full range of documents, from title deeds and approvals from relevant authorities to building plans and other documents as required.

  5. Property Insurance: Another key ask by lenders is property insurance. In case your home is not insured, please be sure to put this on your to-do list. Property insurance safeguards your financial interests as well as that of the lender. Without it, your home does not pass the loan against property eligibility test.

  6. Loan Tenure: Planning your finances is essential as it helps make the right decisions related to your home loan. A few things to keep in mind is that the EMI amount tends to be higher when your loan tenure is shorter. The reverse is also true. 

It is important to choose the sweet spot with a loan tenure and EMI amount that works for you, your income, and your credit score. Using a home loan EMI calculator is a good idea and will let you train better. 

Keep these factors in mind when you apply for a loan against property. Good luck!