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Essentials Of A Property Loan You Need To Be Aware
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Property loan is the ideal type of loan for individuals need an immediate source of finance. Since the individual’s property is being provided as security, the loan becomes an affordable option. The amount issued as loan for a property depends on the market value of the property. Financial institutions offer up to 40 to 60 percent of the market value of the property as loan to the applicant. Unlike other types of loans the approval of the loan amount does not just depend on factors such as income, age and credit score of the applicant but also on the value of the property being provided as security.
There are a variety of purposes for which a property loan can be used. This type of loan appeals to both individuals as well as businesses. For individuals looking for an affordable source of finance this loan option is ideal. It is also particularly beneficial for businesses who cannot afford high interest loans. They can simply make the most of their own property and get a more affordable loan. The loan can be used to invest in a business, pay for education, marriage, medical treatments or even vacations abroad.
The one thing every applicant must pay attention to is the loan against property eligibility criteria. Most financial institutions look at the applicant’s income, credit score, age and the market value of the property being provided. It is important for both individuals as well as the business to have a high credit score. The credit score provides the financial institution with information about the applicant’s monthly expenses, past loans, defaults occurred if any and current liabilities. A low credit score may tell the institution that the applicant may not be able to afford the loan. One must take steps to boost their credit score. They can do so by repaying any pending loans, reducing monthly expenditure and also avoiding defaulting on any loans.
When submitting an application form for the property loan one must ensure they have provided all the necessary documents one requires. Every loan applicant will be required to submit identity proof, proof of income, bank statements, education qualifications, business profile and processing fee cheque. Along with this, one must provide documents the financial institution demands related to the property or plot of land being submitted as security.
Though this type of loan may be a more affordable option, any defaults can prove to be a costly for the borrower. If the borrower is not able to repay the EMIs each month, the financial institution will be forced to sell the property to recover the loan. Hence one must always be prepared and ensure they repay the loan on time.
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 Home improvement / renovation loan, loan against property eligibility.
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