As per a recent consumers study, the demand for a loan against property grew almost 20% during H1 of 2021. Although the demand graph for this credit is rising, lenders have become alert about loan sanctions. To reduce the delinquency rate in this segment, lenders tightened their eligibility parameters. Thus, it has become imperative for individuals to find ways to increase eligibility for loan against property, regardless of the current market scenario.
Tips to increase eligibility for loan against property
Meeting the eligibility not only hastens the loan approval it also helps get the best current loan against your property interest rate available in the market.
Following are some of the most useful tips individuals can consider while planning to apply for a loan against property.
-
Know the property value
The eligibility criteria of a LAP depend on the current market value of the home pledged. In other words, if the property value of a property is higher, the eligibility for the advance against it will increase and vice-versa.
Lenders usually offer a higher LTV against a property located in a prime location with modern facilities. Similarly, the property type also plays a vital role in loan against property eligibility. For instance, the loan eligibility is more for a self-occupied residential property than a commercial one.
-
Consider your age
The age of applicants also determines the LAP eligibility. Usually, depending on the employment type, the age criteria for a loan against your property ranges between 23 to 70 years. However, with higher age, the eligibility decreases as the working year decreases, which also lowers one’s capacity to repay credit.
Hence, it is better to apply for a LAP when one still has considerable years left for retirement. It will help them to increase eligibility for loan against property.
-
Mention all income sources
Before sanctioning a loan against property, lenders also assess the monthly income of applicants to determine eligibility. Hence, it is necessary for applicants to cite all additional income sources to improve eligibility.
For instance, salaried individuals can mention rental income from property, interest earned from investments and likes. Alongside, employment stability also plays a vital role in LAP eligibility. For instance, individuals employed in a reputed organisation will get the best deal on this credit for a longer period.
-
Clear existing debts
Besides monthly income, individuals also need to consider the existing debts to improve their eligibility for a LAP. In this regard, the income to debt ratio is crucial. Ideally, this ratio should not exceed 40% of a borrower’s net monthly income.
Besides boosting the eligibility, a lower debt-to-income ratio also helps one secure lower interest rates against a LAP.
Additionally, individuals can plan their repayment with the help of an online EMI calculator for LAP. It allows them to choose a suitable tenor as per their repayment capacity.
-
Maintain a good credit score
The eligibility for most credit depends on an applicant’s credit score, and a LAP is not an exception. Ideally, a credit score of 750 is considered sufficient to qualify for most credit instruments.
However, if you have a lower credit score, you can adopt some healthy financial habits to boost your eligibility. It includes clearing existing debts faster, limiting hard credit inquiry, etc.
-
Do not ignore documentation
Individuals also need to complete proper documentation to improve their eligibility for a LAP. Usually, individuals need to submit identity, address and income proof, employment proof, bank account statement of last 6 months and the property papers.
For more convenience, individuals can also use a loan against property eligibility calculator to check the maximum loan amount they are eligible for.
Reputed financial institutions also extend pre-approved offers that simplify and hasten loan processing. These are available on a host of financial products like loan against property, home loans, etc. Enter your name and contact number to check your pre-approved offer instantly.
Hence, following the tips mentioned above, individuals can increase eligibility for LAP. However, while at it, they should also plan the repayment beforehand to clear the debts faster.
