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Experts Suggest That These Are The Top Factors That Determine Your Loan Against Property Eligibility!
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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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Whether it is to fund a wedding, renovate a house, pay for overseas education, or even consolidate debt, a loan against property can offer the financial means to do so. Borrowers can apply for a loan against property by pledging residential or commercial property as collateral to the lender. Now, before applying for this loan, it is important to be aware of the factors influencing your eligibility as a borrower.
So, look at the top factors that determine your loan against property eligibility.
Your credit score is one of the most crucial components of your loan against property eligibility. It represents your creditworthiness and with the score, lenders judge if you will be able to repay the loan. Usually, it is advised to maintain a CIBIL score of 750 or above to ensure a faster approval process. To maintain a good credit score, you should always make sure that all the existing loans and credit card dues are paid on time. In addition, you must regularly check the credit report to ensure that it does not have discrepancies that need rectification.
Your age is another important element that determines your eligibility. Lenders prefer borrowers who are young and can assure timely loan repayment. If you are in your late 50s or are nearing retirement age, the lenders can reject the application or charge a high loan against property interest rate. To get the approval, you can apply for a loan with a relatively shorter tenure.
It is crucial to know the ideal tenure for your loan against property. The tenure you choose also affects your loan against property eligibility. A longer tenure spreads your payments over longer durations making EMIs more affordable. Whereas, a shorter tenure makes the EMIs relatively costlier but helps in loan foreclosure. Foreclosure is the right word here
However, lenders expect borrowers to go for longer tenures because it reduces the chance of default and brings them more interest income.
You can enhance your eligibility by ensuring steady and regular flow of income. Lenders always favor applicants with a regular and steady source of income as it indicates that they will pay the EMIs timely. Therefore, you must furnish relevant income proofs to prove that you can bear the EMI payments. Also, you must avoid switching too many jobs or changing your profession before applying for the loan.
A mortgage insurance policy covers the repayment of a mortgage loan in case of the policyholder’s unfortunate demise or disability. Mortgage insurance reduces the risk of both the borrower and the lender because it covers the loan repayment in the event of unforeseen events, easing the burden on one's family. To protect one's financial interests, it is always a good idea to get mortgage insurance. Providing an insured property reduces the chance of default for the lender increasing your loan against property eligibility.
A loan against property can help you meet your financial needs by leveraging your property. However, you must meet the eligibility to get approval. Knowing about the factors that determine the eligibility can help you avail a loan against property hassle free.
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