Property is an asset that not only provides a roof over the head throughout life but also acts as a savior in times of monetary needs. For instance, a property owner desperately in need of cash need not apply for a personal loan, which is usually expensive. Instead, they can use a loan against property (LAP) to get rid of the temporary monetary emergency.
A loan against property in Mumbai can be used for multiple purposes. No financial lender can restrict the use of the sum lent against a loan against property. It can be used for several purposes. For instance, you can use it to meet wedding expenses, finance business and expansion plans, healthcare expenses, or purchase a property that might not otherwise be qualifying for a loan in its capacity. With a loan against property in Mumbai, you get the benefits of:
- Adequate loan amount is sanctioned
- Long repayment tenor
- Relatively cheaper than any other type of consumer or commercial loan
- Using the funds for any purpose
- Simple documentation, easy processing, and fast disbursal
Keep these things in mind if you are also planning to take a loan against your property in Mumbai:
1. Decent loan repayment history
Before approving a loan against property, financial lenders go through records like payment-track history and repayment capability of an individual. If you are dealing with other loans or have existing liabilities, the eligibility for another loan goes down. Some financial lenders in Mumbai also consider how many dependents an individual has in their family. More number of dependents means that the borrower has a lower repayment capacity.
2. High credit score
We’ve moved past the era when it was thought that availing a loan against property was a symbol of financial distress. Today, the reverse is true. A borrower has to be in good financial health to avail of a loan against property. That is the reason why credit scores, which denote our financial health, are crucial in securing a sizeable loan against property.
A decent credit score must be in the range of 750-900. However, lenders can consider you to be loan worthy even if the credit score is between 650 and 700, provided you fulfill other conditions. For instance, if you have job stability, own a house, and do not have a negative credit history, you might get a loan against property without even meeting the minimum CIBIL score for a loan against property in Mumbai.
3. Accurate and complete documents
Besides submitting an application form and identity, income, and address proofs, LAP borrowers in Mumbai also need to submit the ownership documents and a property valuation report. Remember, you need to mention the correct information as the lender is going to verify the information furnished.
4. Financial capability to repay loans with a shorter/longer tenor
The loan tenor plays a crucial role in determining the loan against property EMI outgo and total cost. Ideally, the selection for loan tenor must be based on the repayment capacity. Shorter loan tenors typically result in high EMIs and low-interest costs and vice versa. Thus, opt for shorter loan tenors if you see that you can pay EMIs within the given deadline without sacrificing contributions to other important financial goals. In case you cannot, go with a longer tenor for lower EMIs.
5. Meet loan against property eligibility criteria
A loan against property eligibility criteria is defined as a set of criteria based on which financial institutions assess the creditworthiness of a borrower who is willing to avail and repay a specific loan amount. Loan against property eligibility depends on several factors such as credit history, credit score, age, financial position, other existing financial obligations, etc.
How to enhance loan against property eligibility?
Before you avail loan against property, you can try enhancing your eligibility by
- Adding a co-applicant. Any earning family member can co-apply
- Make sure your income reflects stability. Do regular savings and investments
- Furnish details of additional income sources
- Maintain a record of variable components in your salary
- Take corrective actions to rectify errors in the credit score.
- Repay short-term debts and ongoing loans
To check your loan against property eligibility, you can also use an EMI calculator on loan against property to get an estimate of probable EMI outgo. These calculators are self-help planning tools. The results depend on factors, including the assumptions you provide. These, however, do not guarantee full accuracy, or applicability to your circumstances.
The Final Word
During the loan tenor with an existing lender, if you get a better loan against property offers, you can transfer the loan from an existing lender to a new lender. This involves prepayment of an existing loan against property followed by applying for a new loan with a new lender. Before opting for a loan against property balance transfer, calculate all the costs involved. You need to ensure that with prepayment, loan processing, and any other charges on the new loan against property, whether loan transfer is going to be a lucrative deal for you.
