PNB Loan Against Property 
Eligibility Criteria

Fulfilling PNB loan against property eligibility criteria you can quickly avail loans up to 65% of property value for your personal or business needs. Both salaried as well as self-employed professionals/ non-professionals can apply for PNB loan against property up to 5 Crore for up to 15 years. The minimum income should be Rs 25000 per month.

About PNB Housing Loan Against Property

PNB Housing Finance Limited, a subsidiary of Punjab National Bank, offers a variety of home loans and non-home loans to its clientele located all over the country. The non-home loans comprise of the following products:

  • Commercial Property Loan: Financial assistance to purchase a commercial property like shops, industrial galas, and so on.
  • Loans Against Property: Loans to satisfy personal and business requirements
  • Lease Rental Discounting: Loans against rent receivables to meet business needs
  • Loans for Real Estate Developers: Financing real estate projects like apartment complexes, and so on.

PNB Housing Home Loans Vs. Loan Against Property

  • Home loans are for construction or purchase of houses, whereas loans against property are for meeting personal and business needs.
  • Home loans result in the creation of an asset. There is no asset-creation in a Loan Against Property.
  • The rate of interest on a home loan is lower than the Loan Against Property
  • The home loans have a more extended repayment tenure
  • The Loan-to-Value ratio is higher in the case of home loans when compared to loans against property.
  • The eligibility criteria for a home loan are comparatively relaxed for a home loan
  • In the home loans, you have prime security in the form of equitable mortgage of property. In the loans against property, the banks obtain collateral in the form of equitable mortgage of property.

PNB Housing Loan Against Property - Features

  • Loans available to meet all kinds of personal and business needs
  • Loans available against residential and commercial property
  • PNB Housing offers loans against residential and commercial plots
  • Attractive rates of interest that are better than the personal loans
  • Repayment tenures that extend up to 20 years
  • Simplified eligibility norms

PNB Housing Loan Against Property

Of the four non-home loan products on offer from PNB Housing, the Loan Against Property and Lease Rental Discounting facilities require collateral.

Loans Against Property

Purpose of the loan

  • Meet personal and business needs

Business needs

  • Expansion of business
  • Meet working capital requirements
  • Purchase long-term assets
  • Foreign travel for business promotion
  • Any legitimate business use

Personal needs

  • Education expenses of self, spouse, or children
  • Marriage expenses of children
  • Family functions
  • Medical expenses of self and family members
  • Refurbishment of house
  • Purchase of consumer-durable items
  • Any legitimate purpose

Loan amount

  • Depends on income level and repayment capacity
  • Maximum of 60% of the value of property

Rate of interest

  • Loans against commercial property - 10.50% to 11.00%
  • Loans against residential property - 10.25% to 10.75%
  • Loan against Plot of land - 11.25% to 11.75%

Repayment tenure

  • Extending up to 20 years
Lease Rental Discounting

Purpose

  • Loan against rent receivables for meeting personal and business needs

Loan amount

  • Maximum loan up to 80% of the rent receivables

Repayment tenure

  • Maximum of 10 years

Rate of interest

  • 10.25% to 10.75%

PNB Housing Loan Against Property - Eligibility

The eligibility criteria for the loan are as follows:

Loan Against Property

General Eligibility

  • Salaried employees and self-employed persons are eligible for a Loan Against Property
  • A self-employed person can be a professional as well as a non-professional individual
  • Salaried employees should not be more than 60 years at the time of loan maturity
  • The maximum age at the maturity of the loan for a self-employed individual is 65 years
  • The applicant should have unencumbered property in their name to offer as collateral
  • Properties already mortgaged to PNB Housing are eligible as collateral subject to the satisfaction of the LTV ratio.
  • The applicant should have a regular source of income
  • PNB Housing accepts rental income for calculating the eligibility
  • The applicant can bring in an eligible co-applicant with a regular source of income. PNB Housing considers the income of such co-applicants for determining the overall eligibility.
Lease Rental Discounting

General Eligibility

  • Salaried and self-employed individuals and professionals are eligible for this facility
  • The applicant should own property in the metro, urban, or semi-urban areas
  • The property should have been let out to PSUs, Government and semi-government departments, banks, financial institutions, reputed corporates, multi-national companies, and so on.
  • The loan amount depends on the future rent receivables. The maximum residual period of the lease cannot exceed ten years.
  • Assignment of rental income is one of the conditions of repayment
  • If the applicant is a corporate entity, the facility should be guaranteed by the personal guarantee of the promoter or director of the company in an individual capacity. The
  • The loan repayment is through an Escrow account. The maximum repayment tenure is the residual period of lease subject to a ceiling of ten years.
  • The lessee should undertake to remit the rent directly into the designated Escrow account

PNB Housing Loan Against Property - Factors that determine the eligibility

The following factors determine the eligibility of the borrower:

  • In the case of a Loan Against Property, the applicant should have a regular source of income. It can be by way of salary, business, or rental income.
  • PNB Housing has its internal eligibility criteria concerning the maximum EMI/NMI ratio
  • In the case of lease rental discounting, the eligibility is determined solely based on future rental income.
  • The EMI should not exceed the monthly rental income
  • PNB accepts the income of eligible co-applicants for calculating the overall eligibility
  • The loan amount depends on the market value of the property. Under no circumstances can the loan exceed 60% of the realisable value of the security. Besides, PNB Housing can demand additional or interim security if necessary.

PNB Housing Loan Against Property - Security

  • There is no asset creation in the case of Loan Against Property. Hence, there is no prime security.
  • PNB Housing accepts collateral in the form of equitable mortgage of property. PNB Housing has certified valuers who carry out the valuation of the property. The LTV ratio should not exceed 60% of the value of the security.
  • Under specific circumstances, PNB can seek additional or interim security. It can be in the form of equitable mortgage, LIC policy, PNB FDs, or any other marketable security.

PNB Housing Loan Against Property - Lease Rental Discounting - Escrow Account

Opening of an Escrow account is necessary for availing the Lease Rental Discounting product. The purpose of this account is to ensure the prompt recovery of the loan instalments. The lessee undertakes to credit the rent amount into the Escrow account. PNB Housing recovers the EMI and then disburses the balance amount to the borrower.

PNB Housing Loan Against Property - Documents Required

The applicant should provide self-attested photocopies of the following documents:

  • Application form duly completed in every respect with photographs of all applicants and guarantors, if called for.
  • Age Proof and ID Proof document: PAN card, Passport, any other certificate from a statutory authority.
  • Residence Proof: Passport, Driving License, Telephone Bill, Ration Card, Voter's ID card, any other document from a regulatory authority.
  • Educational Qualifications: Salaried employees and self-employed professionals should provide a copy of the latest degree. Other self-employed individuals need not be a graduate.
  • Income Proof: Salaried persons should submit the payslips for the last 3 months. Besides, they should also provide a copy of their IT returns or Form 16. Self-employed individuals should submit the financial statements, and IT returns along with the report of computation of income for the previous 3 years.
  • Proof of the Existence of a Business: Self-employed individuals should provide evidence of the existence of their business. It can be in the form of GST certificate, Shop & Establishment Act Certificate, and so on. A business profile of the borrower is also necessary.
  • Bank Statement: Salaried persons should submit the statement of their bank account evidencing the credit of their salary for a minimum of 6 months. Self-employed individuals should provide the statement of the current account of their business for 12 months. Besides, they should also submit their savings accounts statements.
  • Processing Fee Cheque: In favour of PNB Housing Finance Ltd
  • The applicant should submit the photocopy of the title documents of the property along with the approved plan.
  • Lease Rental Discounting: The applicant should submit the copy of the lease rental deed that specifies the rent amount and period of the lease. The lessee should undertake to deposit the rent amount into a specially-designated Escrow account.
  • Other Undertakings: The applicant should undertake not to use the Loan Against Property for speculative purposes.

PNB Housing Loan Against Property - How to Enhance the Eligibility

The loan eligibility depends on the following factors:

  • The income of the borrower
  • The repaying capacity
  • The credit rating of the borrower
  • The value of the security

The borrower cannot influence the value of the security. Therefore, the only way to enhance eligibility is to increase the income or reduce the existing liabilities.

  • Add other sources of regular income such as rental income, interest from fixed deposits, and so on.
  • Close your existing loans, thereby reducing your liabilities. It increases your repaying capacity.
  • Bring in an eligible co-applicant with a regular source of income.

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PNB Loan Against Property Eligibility Criteria FAQs

How does PNB Housing Finance Ltd determine the rate of interest on its Loan Against Property?

PNB Housing offers a floating rate of interest on its loans against property. It refers to the PNBHFR, its benchmark rate for determining the individual interest rates. The reference rate today is 9.70%. PNB Housing adds its spread over the PNBHFR before offering the rate to the individuals. 

How does PNB Housing calculate the interest on the individual loans against the property?

PNB Housing calculates interest on the monthly reducing balance. It is similar to how most of the NBFCs do. Banks, on the other hand, use the daily reducing balance mode that is beneficial to the borrower.

What is the maximum eligibility for an individual borrower in the Loan Against Property product?

Subject to the satisfaction of income and repayment norms, the maximum eligibility under the Loan Against Property is 60% of the property value. PNB Housing Finance has valuation experts in its panel who estimate the realisable market value of the property. The loan amount cannot exceed 60% of this value under any circumstances.

How does PNB Housing arrive at the loan amount in the case of Lease Rental Discounting product?

The rental income earned by letting out the property is the primary criterion for estimating loan eligibility. The eligibility depends on the rent receivables for the residual period of the lease.

  • The maximum residual period should not exceed ten years
  • The maximum loan amount is 80% of the rent receivable amount
  • The LTV ratio should not be more than 60%
  • The EMI amount should not exceed the rental income for the month

All of these factors play a vital role in determining individual loan eligibility.

Who can be an eligible co-applicant for the Loan Against Property?

If the property is jointly owned, all the co-owners of the property automatically become co-applicants. It does not matter if any of the co-applicants have any source of income or not. Other than the co-owners, the following persons can join as co-applicants for enhancing the overall eligibility of the borrowers.

  • Spouse
  • Parents and children (subject to satisfying age norms)
  • Siblings

Under such circumstances, these co-applicants can provide their income details to enhance the overall loan eligibility.

What is the security for the Loan Against Property and the facility of lease rental discounting?

The borrower has to create an equitable mortgage of the property for both the facilities. Besides, the Lease Rental Discounting facility requires the borrowers to assign their rental income in favour of PNB Housing.

How does PNB Housing ensure the recovery of the EMI from the rental income of the borrower?

Such a situation can arise in the Lease Rental Discounting product. PNB stipulates the condition of the opening of an Escrow Account for collecting the proceeds of the rental income. The lessee has to undertake to deposit the rent into this Escrow account. PNB Housing recovers its EMI from this account before making the balance available to the borrower.

Are there any specific restrictions on the usage of funds obtained through a Loan Against Property?

The objective of a Loan Against Property is to meet personal and business requirements. However, the borrower should undertake not to use the funds for illegal and speculative purposes.

How do you classify a purpose as a speculative purpose?

If any investment promises to deliver an abnormally high return, and that too within a short period, it is a risky proposition. Such an investment qualifies as a speculative investment.

What are some examples of speculative investment?

Some of the examples of speculative investment are:

  • Investing in the share market when there is extreme volatility
  • Indulging in gambling, races, and other illegitimate activities
  • Purchasing lottery tickets
  • Investing in bullion
  • Investing in real estate for purposes other than housing