Loans against property (LAP) can significantly help you meet emergency financial requirements. You can use the amount availed through this credit facility to bear any expense required, as it comes with no restriction of end-usage. However, you must meet strict eligibility parameters set by the lender to borrow the required capital at a reduced loan against the property interest rate.
You need to be aware of the factors that can influence your eligibility for LAP. This way, you can refrain from taking a financial step that can hamper your loan approval, as well as your long-term finances.
Things Affecting Loans against Property Eligibility
Following are some of the major influencing factors that can endanger your chances of getting a loan against property:
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Failure to Produce Required Property Details
You need to keep all the required records of the property that you will mortgage when you apply for a loan. Here are some of the documents you must produce while applying for a loan against property:
- Sales deed
- Property registration papers
- Tax invoice
- Agreement copy
Nevertheless, these documents may vary from lender to lender. You need to verify what records you need to produce from the official website of your preferred lender.
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Poor Credit Score
You also need to have a strong CIBIL score over the benchmark of 750. Higher score indicates that you repay your loans timely and are financially stable. It helps you to get the requested loan amount easily.
Most lenders tend to either disapprove loan requests or disburse the credit at a higher loan against property interest rate in case the applicant has poor credit score. Financial institutions deem them as risky customers who can default on loans. They compensate for the risk with their higher interest rate.
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Rejection in Previous Loan Application
Multiple rejections of LAP applications create a poor impression. It can hamper your creditworthiness. In fact, you can see a dip in CIBIL score if it happens with you. It then becomes difficult to get loan approval.
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Loan Request towards End of Career
Your age is also a significant factor impacting the eligibility for an LAP. It may become difficult to repay your debt after retirement. This is why if you opt for borrowing near the end of your career, lending institutions may reject your loan request.
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Professional Instability
Borrowers with no fixed profession and job stability can encounter difficulty in getting their loan against property approval. Therefore, in order to get this mortgaged loan, you should avoid switching professions too frequently.
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Unavailability of ITR
Income Tax Returns (ITR) is one of the essential documents that testify to the earnings of individuals in a financial year from all sources. It can help self-employed professionals to prove their annual income.
If the ITR is unavailable, lenders may be clueless about your repayment capability and can reject your loan application.
On some occasions, lending institutions agree to disburse the credit only at a higher loan against the property interest rate if ITR is unavailable. However, this completely depends on the discretion of the said financial institution.
In conclusion, a loan against property is one of the easiest ways to get a sizeable credit to meet any of the financial obligations as it has no bounded user restraints. Unlike unsecured loans, you get a low loan against a property interest rate that you can easily repay. However, under some circumstances, such as inadequate credit score, asking for loan at the end of career, etc. you can encounter refusal of loan request. So, it is necessary to maintain proper financial discipline to avoid such unnecessary scenarios.
