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.
CIBIL 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.
Summary
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.
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