How is the property valued for a micro loan against property?

When you apply for a micro loan against your property, the financial institution carries out an extensive valuation process to determine the property's current true market value. This serves multiple purposes:

• Assesses Accurate Market Price: To determine the prevailing property rates in the city, a detailed location analysis is done. Commercial viability, demand indicators in the area, and recent sales of comparable properties are all factors that provide inputs to arrive at an accurate market price.
• Considers Property Attributes: The loan provider also evaluates the property's individual merits and demerits affecting its value. This includes aspects like exact measurement of land area and constructed portion, age of the building, quality of construction, maintenance condition, and infrastructure availability like road access or electricity connection.
• Verifies Legal Status: The loan provider investigates the legal status of the property’s ownership and title transfer history. Any disputes, claims or encumbrances can reduce the valuation and must be cleared first. The title report must clearly establish you as the lawful owner.
• Deploys Professional Valuation: Finally, the financial institutes engage professional property valuers who conduct independent site inspections, measurements, and market worth assessments as per RBI guidelines. This report forms the basis for loan approval.
• Decides Optimal Loan Percentage: Based on the final valuation, the loan provider sanctions a loan amount up to 50% to 70% (or higher) of this value. This Loan-to-Value (LTV) ratio protects lender interests while also providing you with substantial financing against the property's worth.