A financial emergency can occur at any time. Sometimes it can be had to arrange funds to meet the expenses. Not clear In such a situation, it is advisable to apply for a loan against property (LAP) to secure the necessary funds. In India, many lenders offer loan against property, and they consider several factors to determine the eligibility of the applicant. Let us look at some of the critical factors that affect the applicant’s LAP eligibility.
If the applicant is past the retirement age or nearing that age, financial institutions can reject loan applications. In such cases, adding a co-applicant like a younger family member who has a steady source of income can help convince the lending agencies of your repayment capacity.
- Employment Details:
The loan applicant’s job or profession plays a significant role in assessing their ability to repay the loan. The lending institutions assess their current employment status to ascertain their eligibility. Financial institutions can also look at their employment history to see if they have a steady job. Frequently changing jobs can imply a lack of stability and reduce the chances of the application being rejected.
- Property Documents:
For quick and hassle-free processing of the application, applicants should have all their property-related documents like registration documents and clearance certificates ready even before approaching the lender. Applicants must ensure that all the documents are valid and signed by the concerned authorities to ensure that your eligibility is not affected due to inadequate documentation.
- Credit Score:
The credit score of the applicant is one of the most critical factors that the lenders consider todetermine their eligibility for a loan. Most lenders in India find a credit score of 700 or above as an ideal score. Applicants who have a lower credit score must first focus on getting their credit score up. Also, applicants with a low credit score can consider including a co-applicant with a high score to increase their chances of getting the application approved.
- Property Insurance:
An insured property gives additional security to the lender against any damages that can be caused to the property due to unforeseen circumstances. Therefore, applicants who have property insurance have higher chances of getting the LAP approved.
- Income Tax Returns (ITR):
Irregularities in the filing of Income Tax returns can reflect poorly on the applicant’s financial profile. For self-employed professionals, lack of proper ITR documents can suggest unstable cash flow and might result in rejection of loan application.
- Monthly Liabilities and Other Loans:
Most financial institutions look at the other financial commitments of the borrowers to estimate their repayment capacity. If their monthly payments use up a sizeable portion of the monthly income, it can raise questions about whether they can pay the EMIs on time.
- Loan Tenure:
Since LAPs are secured loans, lenders may offer a high loan amount depending on the property value and longer tenures. So, for applicants with a generous monthly income, it can positively affect their loan against property eligibility.