Most major steps in life like marriage, education, building a house, etc. require a great deal of money. There are several ways to fund these requirements and one such way is to take a loan against your property; loan against property is a loan availed by mortgaging property.
A loan against property or LAP is popular among borrowers due to its various benefits, easy processing being one of them. However, the fulfilment of certain eligibility criteria is required to be eligible for a loan. Let us examine some of the factors which could impact your eligibility when borrowing a loan against property:
Age of the Applicant
This serves as the most basic eligibility criteria to consider when applying for a loan as it determines your repayment ability. If the applicant is retired or will retire soon, the chances of rejection of the application are high. It is advisable to go for a shorter loan duration or get a co-applicant on board to avoid missing EMI’s.
For both salaried and self-employed workers, employment status and job stability are key factors for sanctioning a loan for almost all lenders. The number of years of association with the organization and the salary being drawn monthly is assessed to ascertain the borrower’s ability to repay the loan. If you are prone to switching jobs frequently, the chances of your loan application getting rejected are high as it leaves a negative impression on your financial stability.
Closely related to employment stability is income stability; a stable and sufficient source of income is important for a lender to sanction an application. An applicant must maintain a stable job/business to earn a stable monthly income, which determines his ability to pay back the loan. On average, if the loan EMI exceeds 60% of the monthly income of the borrower, the application is rejected.
Credit scores show how effectively a person has been repaying his existing loans and credit card payments. A score of 700 and above is considered as a healthy credit score. Most lending institutions look at an applicant’s credit score before sanctioning a loan. Any late payments, cheque bounces, defaults in payments, etc. reflect in your credit history and can impact your loan application.
For availing a loan against property in India, property documents must be authentic and valid. Common documents related to a property include permissions, registrations, building plans, clearances, and so on. If the property is associated with any legal turfs or if any of the documents are not in order, the application is likely to get rejected.
Income Tax Returns (ITR)
Despite having a stable job and a high monthly salary, your loan application may get rejected due to insufficient ITRs. An aptly filed ITR for the last 3-4 years ensures a steady flow of income and increases the chances of your loan getting sanctioned.
Along with the above-mentioned factors, the leveraged property must be insured as a trust-building exercise. An insured property fosters a sense of security against the property and increases the chances of loan sanction.
Given that these following factors are taken care of, and one understands and respects the short term and long-term responsibilities associated with it, LAP is one of the easiest options to arrange for funds. With interest rates starting at just 10.5%, Tata Capital offers easy loan processing, convenient EMI options, and low fees and charges for a loan against property. Contact today for more details!