Loan against property is considered as one of the fastest ways to obtain financial assistance, as the property acts as collateral for the loan. However, ownership of the property is not the only criterion to be eligible for a loan against property. Here are seven factors that determine your eligibility to get a loan against property,
Property documents
The property documents generally include permission from local authorities, environmental clearance, building plans, and so on. Banks and financial organisations that are providing loan check the documents of the property before giving out the property mortgage loan. If they find any inconsistencies or legal issues in the documentation, the chances of getting the desired loan amount get reduced.
Employment status
Your employment status plays a crucial role while getting a loan against property. Banks and NFBCs require all the information regarding your employment status and income to determine your eligibility for a loan. Stable employment with steady income depicts the loan repaying capabilities of an individual. The loan applications of such individual are approved quickly by the loan lenders.
Credit Score
Besides property,your credit score is taken under consideration when you apply for any loan. Your credit score is a key factor that decides whether the loan application will get an approval or not. Every loan lender has tools to calculate your credit score, which reflects your capabilities to repay your current loans and credit card payments.
Age of the Applicant
When it comes to getting a loan, your age plays an important role. People in their thirties or forties can get their loan applications sanctioned faster. However, getting approval on the application of mortgage loan against property is difficult for individuals who have reached their retirement age or approaching it.
Retirement generally affects a person’s capability to repay the loan negatively. However, this does not mean people approaching their retirement cannot get a loan against property. They can always apply for a loan along with any earning member of their family as a co-applicant.
Tenure of Loan
You should always select the tenure by considering your financial capabilities to repay the loan. Although shorter tenure releases you from financial liabilities in less time, choosing a tenure where EMIs is more than 50% of the monthly income is not a wise move. If someone selects shorter tenure without considering his/her average monthly income, the chances of getting loan applications sanctioned get reduced.
Filing Tax Returns
Filing regular tax returns is one of the primary requirements of the loan application process. The applicant is asked to provide tax return filings for at least the last three years. These documents assure that the applicant has been earning a steady income for a considerable amount of time, and thus will a likely candidate to continue paying his EMI’s on time. The failure to provide tax return documents could very likely result in rejection of the loan application.
Property insurance
The properties secured with terms of insurance policy have additional benefits in the process of getting a property mortgage loan. The property insurance policy builds trust between borrowers and lenders.
