When opting for a personal loan, borrowers have to fulfil several eligibility criteria set forth by banks and NBFCs. Being unsecured, personal loans require a high credit score of 750 or above. Thus, availing such a loan can be a hassle for numerous individuals.
Without the need for such a high credit score, a loan against property can deliver more benefits than a personal loan. The low Interest Rates on Loan Against Property in comparison to other loans provides a better option and secured features enable a borrower to pledge a property as collateral to the lender against which the loan is approved.
However, customers also have to fulfil minimum loan against property eligibility criterions to avail. By satisfying these requirements, a borrower can also be entitled to benefits like pre-approved offers.
To take advantage of a loan against property, borrowers can follow the tips mentioned below to improve their eligibility:
Tip 1. Maintain Relevant Property Documents
Since one of the critical requirements of sanctioning such loans is a property, hence, one should ensure that all its documents are in place.
The property documents for a loan against property India include:
● Property registration/gift deed/sales deed/patta papers
● Chain of Title/Previous registrations
● Property map
● No Objection Certificate (NOC) from local government bodies like Municipal Corporation, municipality, Gram Panchayat, and Urban Improvement Trust (UIT).
Banks and NBFCs require a customer to submit the original copy of any of the documents mentioned above only after loan approval.
Tip 2. Maintain Personal Documents
A borrower needs to keep in check of all the personal documents as it can play a significant role in boosting eligibility for a loan against property.
The loan against property documents required are:
● Aadhaar card
● Voter ID card
● PAN card
● Driving License
● Valid photo ID card issued by a government or private enterprise
As address proof, customers can provide any of the documents mentioned above containing the permanent address. Also, they can provide the latest electricity, telephone, post-paid mobile, or gas bill.
Tip 3. Keep FOIR In Check
The Fixed Obligations to Income Ratio is the percentage of monthly fixed obligations a customer has with respect to his/her income. Bank and NBFCs require a customer to have a FOIR of 50% or below.
Applicants with a 40% FOIR will have higher chances of boosting their eligibility for a loan against property.
Tip 4. Have a Decent Credit History
One of the crucial Loan Against Property Eligibility is the credit report which summarises the credit history of a borrower. This credit history speaks of a borrower’s income stability and intention to repay the loan. It can be depicted by the following:
● Number of credits
● Types of credit
● Duration of each credit
● The total amount of credit
● The utilisation of credit limit
● Timely payment of credits
Other than the ones mentioned above, a credit report will also include the number of credit inquiries financial institutions have made of the individual.
A customer’s credit report will be satisfactory if he/she has handled all credits accounts responsibly, repaid them in due time, and has minimum credit inquiries.
Additional Read: Know the Eligibility Criteria to Avail a Mortgage Loan
Tip 5. File Income Tax Returns
Customers that opt for a loan against property have to file income tax returns for at least the previous year. For self-employed individuals, filing income tax returns is a mandatory loan against property eligibility.
Tip 6. Audit Business Turnovers
Self-employed individuals need to audit their business turnover for at least the previous year by a CA. Audited turnover discloses the income, expenditure, assets, and liabilities of the business.
Tip 7. Ensure Long Business Vintage
Financial institutions check the vintage of a business before sanctioning a loan against property or any other loan to self-employed applicants. An enterprise with a vintage of 3 years or more will have higher chances of getting such loans approved.
By following the tips mentioned above, one can boost their loan against property eligibility and even get it processed within 24 hours.