In comparison to other loans, loan against property portrays as the easiest option to generate capital for any financial purpose. Given that there is no restriction on the end-use of the loan amount the customer receives, it stands out as the best credit option. You can get large amounts with a low-interest rate as unabated perks of these loans. Loan against property has the potential to fulfill any personal or business requirements you may have.
With many banks offering easy loans against property, it becomes crucial to know the factors that influence your eligibility for it. These factors make you eligible enough to file in an application and increase your chances of getting it sanctioned.
These factors are:
Credit Score
The most critical conventional criteria for getting any loan is your credit score. A credit score is a three-digit number from 350-900 that depicts your creditworthiness. It assures the lender of repayment of the lent amount. Banks generally prefer a high CIBIL score (650 or above) before you can apply for a loan. Even in a secured loan like Loan Against Property, the credit score is considered before sanctioning the loan application.
Income Score
Having a steady source of income assures repayment of credit without any constraint. Even if you have provided collateral to secure your loan, the lender needs to ensure that you can manage repayment and monthly EMI’s. Also, if the rate of your property is high, it is still essential to have a necessary income. In most banks, EMI’s are not more than 60% of your income. If not, the chances of your eligibility drop down drastically.
Verified property documents
While giving property as collateral, ensure that the documents are in order and complete. Along with documents of the property, you need to submit additional documents like the building plan, title deeds, registration, approval from the relevant authority, and so on. Beware of any legal issues pertaining to your property as the loan is vulnerable to rejection. Ensure that you are a listed owner or a co-owner in the property documents submitted by you.
Loan Tenure
In loan against property, the tenure is typically longer and more flexible as compared to other loans. The tenure of a loan against property might go up to 20 years. Nevertheless, the approval or rejection of your loan application is based upon the tenure of the loan versus your current income. For example, if your income is low, you are more likely to pay regular installments towards a loan with a long tenure. Whereas, if your income is low, but the tenure of the loan is short, your loan application might not be approved.
Borrower’s Age
Loan against property has a minimum and maximum age range set for its borrowers. According to various banks, the borrower must be at least 21 years old. Whereas the maximum age limit is typically set at 60 years. The terms and conditions of the loan demand repayment before the borrower reaches the age of 60. Suppose you apply for a loan against a property when you are 55 years old, the loan’s tenure will be up to 5 years only.
Employment History
What job you do and its nature is an integral factor in Loan Against Property. The stability of the industry you work in is taken into consideration, especially if you are a professional or self-employed individual. If you are a salaried individual but change your job frequently, it portrays a negative image in your application. This implies that your income is unstable. To make a salaried individual eligible for a loan, a minimum of 2-year employment at the same company is mandatory.
Property Insurance
In order to get a loan against property, you need to get your property insured. This insurance is as much required as the value of your property. It is beneficial for both borrowers and lenders in case of an unpredicted incident in the future. Property insurance covers loan repayments, which lifts the burden from your family in case of any unfortunate future events. However, it is also advised to insure your property to secure your financial interests.
Previous loan applications
The lenders, that is, the credit bureaus, have your credit history data. They are aware of your previous loan applications. If any loan application has been rejected in the past, it is unlikely to get a loan against property easily. Hence it is advised to only apply for a loan when it is really necessary. Keep track of your credit history to avoid further loan rejections.
Income Tax Returns
Regardless of your income source, you need to submit your Income Tax Returns to get a loan. Even if you have a high salary and other requirements, insufficient ITR will be a hurdle in getting a Loan Against Property. It gives the lender an idea about the regularity of your income.
Loan Against Property is an easy way out if you have the required elements. However, keep in mind these very specific eligibility criteria before applying for a loan in the future.