Loan against property, also called property-backed funding, lets eligible businesses unlock capital using owned residential or commercial property as collateral. Here’s what typically factors into eligibility.
1. Ownership and Title Clarity
The property must be owned by the applicant or business (or come with clear, legally sound documentation if jointly owned), with no unresolved title disputes. Lenders conduct due diligence on the title before proceeding.
2. Property Valuation
An independent valuation determines the property’s current market worth. The loan amount a lender may offer is typically a percentage of this assessed value, not the price you may have originally paid or expect to sell at.
3. Type and Location of Property
Residential and commercial properties are both commonly accepted, though the location, condition and marketability of the property can influence a lender’s assessment and the terms offered.
4. Business Profile and Repayment Capacity
As with other funding structures, your business turnover, financial documentation and existing obligations are assessed alongside the collateral to determine a suitable loan amount and tenure.
5. Existing Encumbrances
If the property already has a loan or lien against it, this affects how much additional funding can be explored against it, and may need to be settled or restructured first.
Why Consider This Route?
Property-backed funding can potentially offer larger loan amounts and longer repayment tenures compared to unsecured options, since the collateral reduces the lender’s risk.
Want to know if your property qualifies? Reach out to our team and we’ll help you understand the right next steps based on your specific situation.
