A loan against property is one of the simplest ways to deal with any unexpected expenses because, unlike other secured loans, the money you receive has no usage restrictions, which means you can use the funds however you see fit. It is entirely up to you whether you use it for personal or business expenses. A loan against property provides you with a substantial sanction, so you won't have to worry about meeting your expenses.
The most notable benefit of a loan against property is the low interest rates and easy property loan eligibility criteria. Because the loan amount is secured against property, lenders are less hesitant to approve a loan against property at a competitive rate of interest.
Before you apply for a loan against property you must remember these 5 factors that influence your loan against property eligibility criteria:
Age
Your age is an important consideration because lenders prefer to approve loans to applicants who are still young and early in their careers because they can be confident in their loan repayment capacity and have a steady source of income. An applicant who is nearing retirement age can still receive a loan against property, but the lending terms will be higher interest rates and shorter loan terms.
Documentation
When applying for a loan against property, you will be required to submit a set of documents pertaining to your personal, financial, and property information. It is recommended that you submit all of the documents in order to receive a quick approval; failing to do so may cause your loan approval to be delayed or, in some cases, result in the rejection of your loan application.
CIBIL Score
Your CIBIL score is one of the most important factors because a lender will conduct a thorough background check to determine your financial capability. If you maintain a healthy CIBIL score above 750, you can expect to receive favourable lending terms such as lower interest rates, longer tenors, higher sanctions, and faster approvals. A higher CIBIL score assures the lender that you are responsible and creditworthy.
Monthly Income
A lender will assume 50% of your income towards the repayment of your loan, and if your existing financial obligations consume more than 50% of your monthly income, your loan approval may be hampered. It is preferable to have a steady source of income and to have cleared your existing debts before applying for a loan against property.
Income Tax Returns
When you opt for loan against property, you will be required to submit your income tax returns for the previous three years. Even if you have a good CIBIL score and all the necessary documentation, not having the necessary Income Tax Returns can cause problems during the approval process. It is in your best interest to file your income tax returns on time to avoid having your loan against property eligibility impacted.
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