HDFC Loan Against Property Eligibility Criteria

HDFC loan against property eligibility can be instantly assessed online using a LAP Calculator. The basic HDFC LAP eligibility factors include age, income, repayment capacity and property value. The minimum age should be 21 years for maximum loan amount of up to 60% of property value. Both salaried and self-employed can apply for HDFC LAP for planned & unplanned expense for a maximum of up to 15 years.

About HDFC Loan Against Property

HDFC, India's premier home loan financing institution, offers non-housing loans to go along with its popular home loans. The non-housing loan products include the following:

  • Commercial Property Loan: Loan for purchase of commercial property like industrial galas, shops, and so on.
  • Loan Against Property: Personal Loan Against Property for meeting urgent business and individual requirements.
  • Commercial Plot Loan: Loan to purchase a plot of non-residential land for constructing a factory, shop, and similar other activity.

Features and Benefits of HDFC Loan Against Property

Following are some attractive features and benefits of HDFC Loan Against Property:

  • Loans available against entirely constructed and freehold, residential, and commercial properties.
  • Loan Against Property is available for meeting business and personal requirements
  • Business needs can be meeting working capital requirements, financing long-term business assets, or business expansion.
  • Personal requirements can be anything from medical expenses, marriage, education, travel, and any other individual needs.
  • Facility to transfer similar loans from other banks to HDFC to get the benefit of interest rates
  • An extensive network of offices for availing and servicing the loan from anywhere in India
  • Extended repayment tenures resulting in smaller EMIs
  • Attractive and reasonable rates of interest
  • Simplified eligibility norms
  • Hassle-free documentation formalities
  • Facility to check out the eligibility and apply for a Loan Against Property online
  • A fixed-rate of interest and floating rates of interest options available
  • Single and joint applications allowed
  • Funding up to 60% of the property value for existing HDFC customers and up to 50% for new customers.

Note: The bank has launched the consent-based Video KYC facility for personal loan and saving accounts to verify the customer’s identity digitally.

HDFC Loan Against Property - Details

The details of the loan are given below:

Loan Against Property

Purpose of the loan

  • Meet urgent personal and business needs

Type of loan

  • Loan Against Property, entirely constructed and freehold
  • Property can be residential or commercial

Who can apply for this loan?

  • Salaried persons and self-employed individuals can apply
  • The applicant should have unencumbered residential or commercial property in their name
  • Resident Indians are eligible for this facility
  • Non-resident Indians cannot apply for a Loan Against Property

Maximum quantum of loan

  • The maximum loan depends on the income and repaying capacity of the borrower.
  • For existing customers of HDFC, the LTV ratio should not be more than 60%
  • For new customers, the LTV ratio stipulation is 50%

Repayment tenure

  • Extended repayment tenure up to 15 years

Rate of interest

  • Fixed rate option - 9.80% to 11.90%
  • Floating rate option - 9.40% to 11.50%

HDFC Loan Against Property Eligibility

To apply for the loan, applicants must meet the eligibility criteria mentioned below:

Loan Against Property

General Eligibility Norms

  • Salaried Employees drawing a regular income are eligible for a Loan Against Property
  • Self-employed individuals or professionals engaged in business and other professional activities are eligible for a Loan Against Property.
  • The minimum age of the Loan Against Property applicant is 21 years when applying for the loan
  • The borrower should not be more than 65 years
  • Both men and women are eligible for this facility
  • Loan Against Property is available in single and joint names
  • The applicant should have freehold and entirely constructed property in their name
  • Properties having joint ownership are acceptable as collateral. However, all the co-owners should join as co-applicants.
  • Loan Against Property is available against residential and commercial properties
  • The property can be let out on rent, be vacant, or occupied by the applicant
  • HDFC does not finance against vacant plots of residential or commercial land
  • HDFC does not finance against agricultural land

HDFC Loan Against Property - Documents Required

Following documents need to be submitted when applying for the loan:

Salaried Individuals

KYC Documents - Identity and Residence Proof

  • PAN card
  • Passport
  • Voter's ID
  • Driving License

Income Documents

  • Payslips for the last three months
  • Six months' bank statement evidencing credit of salary
  • Form 16 and IT Returns

Property Related Documents

  • Title deeds of the property including the previous chain of documents to establish connectivity
  • No Encumbrance Certificate
  • Approved Plan, if applicable

Miscellaneous Documents

  • If the employment is less than one year old - Contractor Employment letter
  • Six months' banks' statement evidencing repayment of other loans, if any
  • Photographs of all applicants - Affixed on the form and signed across it
  • Processing fee cheque
  • Borrower declaration stating the end-use of funds
  • Own contribution proof, if applicable
Self-Employed Individuals or Professionals

KYC Documents

  • Same as that of salaried individuals

Income Proof Documents

  • IT Returns accompanied by the computation of income for a minimum of three years (Individual as well as a Business entity - attested by a chartered accountant).
  • Financial Statements for the last three years along with annexures and schedules - certified by a CA.
  • Six months' Current Account statement of the business and savings accounts of the individuals

Property Documents

  • Same as described above

Miscellaneous Documents

  • Business Profile
  • Latest Form 26AS
  • In case of the applicant being a company

a) List of shareholders with individual shareholding - certified by a CA/CS

b) MOA and AOA of the Company

  • In case of the applicant being a partnership firm

a) Partnership deed

  • Details of ongoing loans of the business entity and the individual
  • Passport size photos of all applicants and co-applicants
  • Processing fee cheque
  • Declaration stating end use of the funds
  • Proof of own contribution, if applicable

HDFC Loan Against Property - Factors That Determine the Eligibility

Following factors determine the borrower's eligibility for HDFC Loan Against Property:

  • The applicant's income is the prime requirement. The Loan Against Property is available only to those who have a regular source of income.
  • The repayment capacity is another essential requirement for determining eligibility. The borrower should be in a position to repay the loan. HDFC considers all the repayments, including the proposed EMI for the Loan Against Property, to determine the EMI/NMI ratio. The actual loan amount depends on this calculation.
  • The value of the property is a crucial aspect that determines loan eligibility. New customers have to provide a margin of 50% on the value of the property. Existing customers have an advantage, as HDFC finances up to 60% of the realisable value of the property.
  • The credit rating of the borrower has an impact on the eligibility, as well. HDFC usually stipulates a minimum CIBIL score of 650 for considering the loan application. However, if your score is an excellent one, you get the benefit of a lower spread on the interest.

How to Improve the Eligibility for HDFC LAP

Applicants can improve their eligibility for the loan by following these tips:

  • The best way to enhance your eligibility is to show a higher level of income. You can add other income if it is a regular one. Rental income is a steady income. Interest on deposits is also an acceptable source of income. If you receive any pension besides your salary, it is a source of regular income.
  • You can bring in an eligible co-applicant having a regular income. Such a co-applicant can be your spouse, parents, children, and even siblings.
  • Close your credit cards and other short-term loans so that you have higher disposable income on your hands for servicing the loan EMI.
  • Improve your CIBIL score so that you end up with a lower spread on the interest rate

HDFC Loan Against Property - Factors That Determine the Interest Rate

The rate of interest on individual loan plays a vital role in deciding the eligibility. It is because your EMI depends on the rate of interest. The following factors affect the interest rate on your Loan Against Property:

  • The nature of the property: Residential property has a lower rate when compared to a commercial property.
  • The status of the property: Self-occupied residential property attracts a lower rate of interest when compared to non-self-occupied ones.
  • The amount of the loan: Loans less than 50 lakhs have a better rate of interest when compared to the big-ticket investments.
  • The type of interest: Loans with a floating rate of interest are cheaper when compared to the loans with the Fixed Rate of Interest.

HDFC Loan Against Property vs HDFC Home Loan

Following are some key differences between HDFC Loan Against Property and HDFC Home Loan:

  • When it comes to offering security for the loan, the Loan Against Property is similar to the home loan. Both these loans provide an equitable mortgage of the property as security.
  • The significant difference between a home loan and a Loan Against Property is the asset creation aspect. You avail a home loan for purchasing or constructing your house. In the Loan Against Property, you avail a loan against the house.
  • Therefore, the rate of interest on a home loan is comparatively less than the Loan Against Property.
  • The home loan has an extended tenure for up to 30 years, whereas the Loan Against Property is for 15 years.
  • The LTV ratio for a home loan is in the range of 75% to 90%, whereas it is 50% to 60% in the case of loans against property.

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FAQs

Who can apply for an HDFC Loan Against Property?

All resident Indians can apply for an HDFC Loan Against Property. The applicant can be either a salaried person or a self-employed individual. Non-individuals can also apply for an HDFC Loan Against Property. The eligible borrower should have a regular source of income and a residential or commercial property in his or her name. The property should be freehold and fully-constructed. 

Can I apply for HDFC Loan Against Property and offer vacant land as collateral?

No, HDFC does not finance against vacant plots, residential or commercial. There should be an entirely constructed house or a commercial establishment over the land. It does not matter if the property is vacant, self-occupied, or rented. Vacant, entirely constructed properties are treated as self-occupied by HDFC.

Can I mortgage agricultural land to avail Loan Against Property?

No, HDFC does not accept agricultural land as a mortgage. The property should either be residential or commercial. The company does not take vacant residential or commercial plots, as well.

What types of interest rates does HDFC offer on Loan Against Property?

HDFC offers a floating and fixed rate of interest on Loan Against Property. Usually, customers prefer the floating rate of interest, also known as Adjustable Rate. HDFC offers a unique product, TruFixed rate of interest where the interest rate remains constant for two years. Subsequently, it switches over to the floating rate structure.

Which is beneficial to the customer, the floating rate of interest or the fixed rate of interest?

Generally, the floating rate of interest is preferable. Hence, you have the floating rate of interest at a lower level when compared to the fixed rates. If there are extreme fluctuations in the interest rate, the fixed rate is preferable. In today's scenario, the rates are uniform. Hence, a floating rate of interest is the better option

What are the other benefits of opting for the floating rates of interest?

One of the most prominent advantages of the floating rate structure is that the individual borrower does not have to pay any pre-payment penalty. It is not so in the case of a fixed rate of interest loans.

Why do you have to submit the declaration of the end-use of funds?

The Loan Against Property is available to cater to individual and business requirements. Individual needs can be anything from medical expenses to marriage. The borrower has to ensure that he/she does not use the loan for speculative purposes. HDFC seeks a declaration in this regard. Therefore, this declaration states that the borrower will not use the loan for speculative uses. 

What activities constitute speculation?

Any activity that promises high returns within a short period is a speculative activity. Such activities are risky because there is a higher chance of losing the investment altogether. Some of the examples of speculation are indulging in gambling, racing events, investing in bullion and real estate.

Do salaried employees get a better interest rate as compared to self-employed individuals?

No, the interest rate structure is the same for both salaried and self-employed individuals. It was different in the case of home loans. However, it is not so in the loans against property.

Can I offer the same property for home loan and Loan Against Property?

If you have a home loan with HDFC, you can offer the same property for a Loan Against Property. However, you should satisfy all the eligibility norms regarding income and repaying capacity. The value of the security should meet the LTV ratio stipulations for both the loans put together.