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Top 3 Eligibility Criteria For A Loan Against Property
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A loan against property is a type of secured loan in which a bank issues a loan to an applicant with the applicant’s own property used as security. This is an ideal type of loan as since it is secured the interest rate charged is lower. This makes the loan far more affordable to a loan applicant. However, all banks have a certain criteria as to who is eligible for this type of a loan.
One of the most important factors that are taken into consideration when considering an application for a loan against property is the borrower’s income. A bank will always prefer providing a loan to applicants who are employed either a professional or self-employed. The reason for this is that an employed borrower will be able to repay the EMIs every month with ease. There is no uncertainty of whether the borrower will be able to repay the loan or not. The income level also includes a person’s age. Borrowers past the age of 58 are usually not provided with a loan against property as they are too close to the retirement age and may not be able to repay the loan consistently.
2. Value of the property
The value of the property used as security plays an important role in deciding how much loan amount an applicant is eligible for. Most banks will only provide an applicant with a loan amount that is 40 to 60 percent of the value of the property. So even if the applicant may apply for a higher loan amount, if the value of the property is not high enough they may not be eligible for the applied loan amount.
3. Credit history
An applicant’s credit history is usually the deciding factor when a bank is considering an applicant’s loan against property application. The reason why an applicant’s credit history plays such a vital role is because it shows the bank whether the applicant has been able to consistently repay their past loans. An applicant’s credit history also provides a bank with information about the applicant’s purchasing habits as well as loans obtained in the past. If you have any pending loans, you should repay them as that will improve your credit score and increase your chances of getting your loan application approved. Another way one can improve their credit score is by reducing the number of credit cards in their name.
It is extremely important for an applicant to try and meet these eligibility criteria as it can improve their chance of getting their loan against property application approved.
Author Bio :
Aishwarya Mahurkar is an experienced writer concerning the finance industry. Her articles help in informing her readers of the different types of home loan products such as loan against property in India, Home improvement / renovation loan, loan against property.
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