Tuesday, May 14, 2019

How a high Credit Score helps you get a Loan Against Property


Owning a home with all modern amenities is everyone’s dream. A house is an asset of a lifetime and gives valuable returns even in the current unstable market scenario. Buthome buying involves a huge amount of money. So, what do we do to raise funds? Mortgaging our old property for a new one is an easy option. Unlike a home loan, a loan against property reduces the financial burden considerably.

Let’s see how a loan against propertyworks.For example, you have an old property which is not in use. You want to move in to a new apartment with modern amenities. Now, without even selling your old property, you can buy a new one. In simple terms, the process is as follows: You mortgage your old property to the lender for money to buy a new one. To be eligible for such a loan, you’ll need to fulfil certain criteria, the most important of which is your credit score.


One of the deciding factors for a loan against property is your credit score.It is issued by the Credit Information Bureau India Ltd (CIBIL) and is a numerical summary of your credit history. The score is based on an analysis of your past repayment history and financial stability. The minimum CIBIL score required for mortgage loan varies between 300 and 900. Anything above 750 is considered a good credit score.

The Importance of having a good CIBIL Score for a Loan Against Property

The score reflects your past and present financial behaviour. It shows if you are able to repay the loan. Quite obviously, lenders want to provide loans to those who can repay within the loan tenor. If you have a good credit score,you stand to get benefits like a lower rate of interest and a longer repayment tenor.

CIBIL is the most trusted credit rating company in India. The accuracy level of CIBIL is much better than its counterparts. Also, it is very customer-friendly and quick in providing feedback. Since lenders have no information about us when we approach them,they look at our CIBIL score to get the first impression.

If you have a very high CIBIL score, the lender may grant you a loan at a low interest rate with minimum paperwork. Also, with a good score, a loan against property tenure can be as long as 15 years.If your CIBIL score is too low, banks will either not approve your loan application or grant you a loan at a high interest rate. But the CIBIL score is not the only criterion that decides whether or not you are eligible for a loan. You’ll also need to have certain documents ready.

Loan Against Property Documents Required

The following documents are essential for your application for aloan against property to be processed:

       Application form with attached photo
       Proof of current address
       Valid photo ID
       3 months’salary slips for salaried individuals,or proof of business existence
       Certificates of educational qualifications for self-employed professionals
       Form 16 for salaried individuals;last 3 years’ IT returns (self and business)for professionals;last 3 years’balance sheets and P&L statements for business persons and last 3 years’ IT returns (self and business)

       Last 6 months’bank statements for both salaried individuals and self-employed professionals
       A cheque for the processing fee
       Age: Lenders prefer to give loans to those who can pay off the loan while they are still employed. Hence, for loan against property India,most lenders set the maturity age as 60 for salaried individuals and 70 for self-employed professionals.


By and large, your loan against property eligibility largely depends on yourCIBIL Score. Loan against property features generally include a loan amount up to 60% of the property value, quick disbursal and less documentation. Nowadays, both banks and non-banking financial companies (NBFCs) like Bajaj Housing Finance offer loan amount up to Rs.3.5 crore with a maximum tenor of 20 years. Bajaj Finserv also brings you pre-approved offers for personal loans, home loans, EMI finance on different products, and other financial services. Not only does this simplify the process of availing financing but also helps you save on time. All you have to do is share a few basic details and check out your pre-approved offer.

Author: verified_user