Aman was delighted when his home loan request of ₹30 lakh got sanctioned and approved within 48 hours.

So it came as a shock to him when, after all these processes including document verification, the bank informed him that he was eligible for a loan of only ₹25 lakh. The reason was low technical valuation of the property. Banks have an in-house team of experts that gauge properties on various yardsticks and offer 80-85 per cent of the value as loan amount.

Here’s how banks evaluate your home loan proposal.

How valuation is done To evaluate a ready to occupy property, banks take into account the age of the building and quality of construction. They need to be sure that the building lasts till the loan tenure, as they need to dispose of the property in the event of default. Aman’s apartment was constructed in the year 2000 and the bank may have gauged it based on the age of the building.

For evaluating a property under-construction, banks check the quality of construction, materials used as well as layout, to ensure that the construction is as per granted permissions and norms.

The geographical location of your property plays an important role in loan approval too. For example, if the approach road to your property is less than the pre-specified norm of 5m, banks may not approve the loan.

Location matters Similarly, if the property is located in areas prone to risks such as flood or landslide, the chances of your getting the loan approved will go down substantially.

Properties located in prime areas too, at times, face problems in getting approvals, citing encroachments and sharing of pathways with neighbours, non-activity in the plot for long years, negative listing of some locations, etc.

Every home loan borrower should know the basic criteria banks take into account while evaluating a property.

This not only increases the chances of getting home loans approved, but also safeguards his interest as an investor, since property investments are usually big-ticket purchases.

The writer is CEO, Bankbazaar.com

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