Are you having a financial crisis and worrying about how to solve it? It is common to get confused and tense whenever there is a requirement for huge funding. But there are multiple ways of how you generate funding to solve these crises. One of the easiest and quickest ways to get instant funding is to apply for a loan against a property.
As you might guess from the name, the loan against property is a type of secured loan which involves your property as a guarantee against the loan amount. The property acts as security for the lender though the ownership of these properties remains yours.
The maximum amount of loan you can get against the property is usually equal to 40%-60% of the property’s present Market value.
Age Groups Of The Borrower
While applying for a loan against the borrower’s property age plays a crucial role in determining the repayment capacity. If you are already at retirement age or about to retire within a few years, then it is highly unlikely that the application for the loan will be approved. In such cases, it is better to opt for loans that have a shorter repayment period but it could result in higher EMIs payment per month.
Steady Source Of Income
One of the basic and crucial factors for a loan against property is to have a regular and stable source of income. As it earns the confidence of the lender that you will be able to pay EMIs regularly.
Previous Credit History
The worst thing that you can have while applying for a loan against property is a bad credit score. As every bank or lender first checks your previous credit history before approving your loan application. The late payments bounced checks, and other default charges could have a bad effect on your credit history.
Repayment Period Of The Loan
The Repayment period is crucial as a longer repayment tenure could help you to get a loan against property easily and at a lower EMIs. While if you choose shorter repayment tenures it will provide you with a lower rate of interest, but the amount of loan you can get in such situations is also low. Generally, younger people can get a longer repayment period compared to older people as they are closer to the retirement age.
Inadequate Documents Of Property
The property against which loans are raised should have all proper legal documents. The document includes the title deed, plan of the building, approval certificate from the necessary authorities, etc. are crucial to define your current financial situation. The bank authorities will require proper NOC to ensure that the property is approved by all the local and legal authorities.
Previously Rejected Loan Application
The financial institutions and credit offices keep records of your previously rejected loan applications. These rejected applications could appear while checking credit history and could decrease the chance of approval of the application. So it is crucial to apply for a loan only in a situation of emergency; otherwise, it is better to avoid unnecessary application for a loan against property.
Thus these are few factors that affect your eligibility criteria for a loan against property. Apart from the above-mentioned factors, there are various situations or mistakes that you can make, which could decrease your chances of approval.