Loan against property (LAP) is one of the best ways to get a loan. As a secured loan, you are assured of a low interest rate with a LAP, along with a long repayment period and the ability to use the amount as you deem fit.
This loan type is available to anyone who owns a property, regardless of whether they are employed in a salaried job or self-employed in a commercial or professional setting. The amount of the loan sanctioned is also greater than the amount that might be supplied by other unsecured loans. You can avail of a LAP to expand your business, meet your wedding or education expenses, invest money in a new venture, refurnish your house, or almost anything else.
Before accepting a loan against property application, lenders take into account a number of variables. The parameters used to determine the size of a loan and its eligibility range from one lender to the next. Your application for a loan against property will be refused if you do not meet these eligibility requirements. Maintaining a strong credit score, making timely credit card payments, increasing your income, and paying off all previous debts will all benefit you greatly when asking for a loan.
Here are a few tips that could help you to avoiding loan against property rejection.
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Arrange all the relevant documents prior to applying for LAP
Submitting a loan application without including all of the necessary information may result in your loan application being rejected. Before applying for a loan, it is critical that you prepare all of the necessary documentation.
Maintain a High Credit Score
A poor or low credit score on your credit report could result in application rejection. A low credit score indicates to the lender that the individual’s previous loans did not comply with the standards, as evidenced by late payments, non-payment of EMIs, or settlements. This provides little reassurance to a lender, and thus becomes one of the primary causes for loan against property application denial. Therefore, it is crucial that you maintain a healthy credit score before applying for a loan.
Avoid Applying Against Multiple Lenders
Often, you may be tempted to apply for loans with many lenders in order to obtain the best interest rate. However, as this is reported to the credit agency, it may adversely impact your credit score and could lead to loan against property rejection. Instead, compare the interest rates offered by other lenders on the internet.
Determine the maximum loan amount against your collateral:
Prior to applying for a loan against property, it is important to determine the worth of your property. Lenders normally pay between 70 to 75% of the collateral’s value as the loan amount. With the help of Property Loan EMI Calculator you can easily assess your payable EMI for a particular loan amount.
Furthermore, the lender will determine your ability to repay the loan by examining your source of income. If the lender determines that you do not have the financial resources to continue living your existing lifestyle and paying your monthly EMIs, the loan may be rejected.
Ascertain the Eligibility Criteria
Unlike unsecured loans (personal loans), which are determined by an individual’s income, a loan against property has a variety of eligibility requirements. While the terms of a property loan vary across lenders, several basic elements are considered by all. This includes information about the applicant’s income, savings, and repayment history. Credit card debt, earlier loans, and other types of debt are all included in the repayment history.
Additionally, the property’s market value is examined. Before accepting a loan, the lender considers the applicant’s employment status, age, and financial stability. It is critical for the applicant to ensure that they meet the eligibility criteria prior to applying for LAP in order to avoid loan rejection.
Maintaining Job Stability:
An applicant with at least two years of employment stability will be favored over someone who has changed jobs frequently in a short period of time. Therefore, it is recommended that you only apply for property loan if you have a stable work and income source.
Approved Builder for your Property:
When you submit an application for a loan against your property, you must include all of the necessary documentation. If your property is built by an unapproved builder, your loan application may be declined. An approval from a licensed builder is required by the vast majority of lenders before a loan against property can be issued.
Property Title and Ownership:
It is critical to ensure that the title to the property you are using as collateral is free of encumbrances and that it is marketable. The ownership of the property should be legally approved, and it should not be involved in any legal disputes. Whenever there is a co-ownership of real estate, it is required for all of the owners to sign on as co-applicants for the loan. This assures that any rejections based on the title of the property are totally eliminated from the consideration of loan perspective.