Almost every crucial decision and purchase in your life would require financial backing. In such situations, the solution is loan against property. It will be one of the most efficient and easiest ways to acquire large amounts in the shortest time if and only if you own a property on your name.
The process of availing property loan is not difficult but there are crucial factors that affect your loan against property eligibility. Hnec, before opting for property loan you must have to check some important factors. Here is a list of factors:
Top Crucial Factors That Affect Your Loan Against Property Eligibility
- Form of Income
One of the most crucial factors determining your eligibility for a property loan is your income. If you have a steady income, you will be an eligible candidate as you can efficiently repay the amount. Generally, the EMI of the loan shouldn’t be more than 60% of your monthly income.
Additionally, if you have a history of frequently switching jobs, your application will be negatively affected as it reveals the uncertainties behind your income source. In case you are unemployed at the time, your savings might be helpful to justify your repayment capability. If you are a self-employed individual, the profit your business makes and the number of years it has been in the industry will be taken into consideration.
- Credit History
As expected, your CIBIL score plays a vital role in determining whether your loan will be approved or not. Bad CIBIL score is a direct indication of careless repayment behaviour. As a result, adopting a habit of timely repayment can improve your chances of getting a loan. You wouldn’t have to approach individual lenders and waste your time; instead, you can apply for a loan against property online.
Financial institutions keep a record of the loan applications you have made in the past and whether they were approved or not. As a result, if your loan applications are rejected, it will be reflected on your credit profile which will invariably affect your eligibility for a loan. Hence, it is critical that you apply for loans only when needed.
- Age of the Individual
To avail a loan against property, the individual must be at least 21 years old and must not be older than 60 years of age. If the borrower is soon to attain retirement age or as already attained, the chances of loan approval are very low. This is because of the question surrounding the loan repayment capability post-retirement. In such cases, you can opt for a shorter loan tenure, but on the downside, the monthly instalments would be higher.
- Documents of the Property
As you are pledging property as collateral, lenders will require you to present the entire documents associated with the property for verification. If the financial institution finds any discrepancies related to the documents, your loan against property eligibility is in question.
- Property Insurance
The property insurance will help in recovering the damages your property might face. Having coverage for your property reduces the risks associated with it, and lenders are more likely to sanction loans for such properties.
- Loan Tenure
As longer loan tenure means a more extended period to pay back the loan, your monthly instalments will be significantly lower. If your monthly income is lower, you can opt for a longer tenure as it will be more manageable. Further, if you are ineligible for a loan due to concerns with repayment capability, lenders may sanction a loan with longer tenure.
- Income Tax Returns (ITRs)
Income Tax Returns is a solid proof that depicts a steady flow of income. Lenders usually ask for the past three years’ income tax returns.
These are some important factors which affect your eligibility criteria of loan against property. Before applying for a property loan must check the eligibility and also calculate the value of the property. You own or kept as collateral for smooth processing.