6 Lesser-Known Factors that Affect your Loan Against Property Eligibility
While applying for loans today is a quicker and easier process, there are still specific eligibility criteria that are required to be met. While some factors, such as income, may be well known by you, there are some that you may have no idea about. It’s ideal to understand the factors determining your loan against property eligibility before applying for a loan. Here are six lesser-known eligibility factors that you should note:
While, at first, it may seem that age is an irrelevant factor when it comes to your loan against property eligibility, it plays a crucial role. The younger you are, the more income-earning years you have ahead of you, and hence the repayment of the loan should not be an issue. However, if you are closer to retirement, your loan against property eligibility may be a concern. Youu can try to opt for a loan against property with shorter tenure in such a case.
2. Job history
If you have frequently switched jobs in the past, this may be an issue regarding your loan against property eligibility. This is because this factor raises a concern about your income stability, which is one of the primary factors that lenders look at when looking at loan applications.
3. Credit history
Your credit history or credit score is crucial in determining your loan against property eligibility. This tells the lender about your creditworthiness and the probability of you defaulting on your Equated Monthly Installments (EMIs). Also, if you have previously been rejected for a loan you applied for, this might impact your loan eligibility.
4. Property documents
All the documents related to the property against which you are applying for the loan need to be in place. This is because the financial institution needs to ensure that there are no issues with the property’s title and that all the documentation is complete and in order.
5. Income proof
Even if your income is more than sufficient for the loan amount you’re applying for, if you do not have the required payment proof documents, it may impact your loan against property eligibility. For instance, if you are a self-employed individual, most lenders require your Income Tax Returns (ITRs) for the previous two to three years.
6. Home loan insurance
When the property you are taking a loan against is insured, your loan eligibility increases. This is because insurance coverage lowers the risk for you and the lender. It’s important to note that the home loan insurance is relevant here and not home insurance. Home loan insurance covers the loan repayment if you cannot meet your debt obligations subject to the terms and conditions of the insurance policy.
Before you apply for a loan against property, go over these factors to have a better sense of your loan eligibility. You can also use a loan against property calculator to help you determine your ideal loan tenure and give you an approximation of your loan EMIs.