When it comes to taking major steps in life, the first thing that comes to your mind is ‘How would you arrange for the finances?’ Every new phase of life, whether personal or professional, involves a great deal of money and while there are several ways of funding your requirements, loan against property serves as one of the best ways to meet your financial requirements in a quick and efficient manner.
As the name suggests, Loan Against Property or Mortgage Loan is a loan disbursed by a financial institution against the mortgage of a property. The property being offered as mortgage fulfills the purpose of security for the lending institution, while the ownership of the property remains with the borrower and can continue to occupy the premises.
While usually, the maximum amount of disbursement for a loan against property ranges from 40-60% of the fair market value of the mortgaged property, fulfillment of certain eligibility criteria is required to be eligible for the mortgage loan.
9 Factors Affecting Your Loan Against Property Eligibility
Regular Flow of Income:
One of the most primary factors is that the applicant must have a steady and regular source of income which ensures that the home loan EMIs will consistently be paid.
Age of the Borrower:
The borrower’s age plays an important role in the ability of repayment of the debt. If the borrower has already reached the retirement age or will attain the age in a couple of years, then chances are your loan application might get rejected. In such situations, you can always try for loans with a shorter duration, which however results in higher EMIs.
Bad Credit History:
A bad CIBIL Score is the last thing you would want if you’re applying for a Loan Against Property. Naturally, lenders seek the repayment ability of borrowers before lending and your credit history needs to support the fact. Any late payments, cheque bounces, defaults in payments etc affect your credit history and with such impression, chances are your application would get rejected.
With longer tenures, your payments are spread across longer durations, resulting in lower EMIs. In case of low incomes, you can always opt for longer tenures resulting in higher chances of a successful outcome.
Repeatedly Changing Jobs:
If you’re a professional, job stability plays a significant role in your loan against property If you’re in the habit of frequently switching your jobs, your loan application might be rejected by your financial institution.
Insufficient Property Documents:
The documents related to the property that needs to be mortgaged should be complete and in order. This includes title deeds, approvals from relevant authorities, building plans and other documents as required by your financial institution. The lender needs to ensure that the property has a clear title and is approved by the local authorities before lending you the amount.
Rejection of a Previous Loan Application:
Financial Institutions and credit intermediaries keep a record of the loan applications that have previously been rejected. If your loan is rejected, it will appear in your credit profile check, hampering your chances of getting a loan approval. Thus, it is important for you to apply for loans only when in need and avoid applying without any reason.
Insurance of the Property:
Mortgage insurance always lowers the risk of a borrower as well as lender as in case of any unfortunate circumstances, the insurance covers the loan repayment reducing the burden on your family. It’s always advisable to avail a mortgage insurance to safeguard your financial interests while improving your mortgage loan
In cases of a borrower being self-employed, the lender usually asks for the most recent 3 years income tax returns. In cases of inadequate ITRs, even though your income is adequate, the lender would find it insufficient to prove your regular flow of income, eventually reducing your chances of an approval.
Indiabulls Home Loans offers Loan Against Property with maximum finance at highly attractive interest rates of as low as 8.70%* per annum. To apply visit IBHFL Website and fund your needs for your desired purpose.