If you have to be bailed out of a financial crisis, you can rely on unencumbered property. If you own a commercial or residential property that is free from encumbrance, you can raise ample funds to relieve yourself from any kind of financial stress. A Loan Against Property will fetch you as much as 50% to 75% of the market value of the property. This significant amount can be utilised for any purpose except speculation. It could be for funding a wedding, child’s education, business expansion, or even to buy another property. A loan against property is a great debt consolidation tool.
It is relatively easy to apply for Loan Against Property with an online loan application facility provided by most financial institutions. You can apply online for Axis Bank Loan Against Property or ICICI Bank Loan Against Property by accessing their official websites and providing the necessary details. Before applying for a loan against a property, you should check the eligibility criteria and the interest rate. Meeting the eligibility criteria will enhance the chances of approval of the loan application, and negotiating for the best interest rate will help you keep the EMI at a reasonable level.
There are various factors like the marketable title, location and age of the property that will be considered besides your income, age, credit score, debt to income ratio, stability of employment/business to assess the loan eligibility. You should be aware of these factors as they impact your Loan Against Property eligibility significantly.
#1. Credit Score
Your credibility and financial discipline are assessed by a credit score. A higher credit score will fetch you the loan at a considerably lower rate of interest. With a good score, you can be confident of getting the loan through without any hitch. For ICICI Bank Loan Against Property, the minimum credit score required is 700 for the loan application to be considered.
#2. Employment status
The financial institutions are very particular about your current employment status and your income. These are the key factors that depict your repayment capacity. Another crucial factor is the stability of your employment/business. Frequent shifting of jobs or business plans can shuffle your budget and disrupt your repayment schedule. To qualify for Axis Bank Loan Against Property, a minimum work experience/business existence of 3 years is mandatory.
#3. Age and value of the Property
All lenders have stringent guidelines with respect to the age of the property. A property beyond a certain age will not be accepted as security. However, loan quantum reduces with the property’s age as the property’s market value dwindles with age. Despite being old, if the property is in good condition, the lenders consider leveraging the property as viable.
#4. Income Tax Returns
Income Tax Returns is a crucial component of the loan application process. With Income Returns, the lenders will be able to comprehend the regular flow of income. The lenders will ensure consistent income flow by insisting on 3 to 4 years of Income Tax Returns. This document will be even more essential if you are self-employed. If Tax Returns are not available for 3 to 4 years, usually, it will be challenging to get the loan sanctioned. However, some lenders consider the loan application if you can provide valid documents like bank account statements portraying a stable flow of income.
#5. Age of the applicant
The age of the applicant will widely affect the eligibility of the loan against property. To qualify for ICICI Bank Loan Against Property, the age of the applicant should be over 25 years of age, and the loan should mature before they attain the age of 65. If the applicant is nearing retirement age, the loan application will be rejected for obvious reasons. The younger the applicant, the longer the tenure can be. A longer tenure will enhance the loan eligibility as the EMI will fit into the available budget.
To mitigate the risk of loan rejection, you can include a co-applicant who has a regular source of income. The co-applicant can be any earning member of your family. With the joint income, the lenders will not be sceptical about the loan recovery.
#6. Property documents
Sufficient documents to demonstrate the marketable title of the property is required. The property documents include title deeds, permissions/approvals from relevant authorities, building plans etc. Thorough legal scrutiny by the panel advocate will be conducted to rule out any legal and technical discrepancies. If any legal issues unearthed will negate the chances of approval of the loan.
#7. Interest Rates
The loan cost largely depends on the interest rates. With the credit score issue sorted out, you can scout for a lender providing the loan at a considerably low rate for a score.
Axis Bank Loan Against Property and ICICI Bank Loan Against Property are available at both fixed as well as a floating rate of interest. While the former stays constant throughout the loan tenure, the latter depends on market conditions. The fixed rate of interest is priced slightly higher than the floating rate. If you are availing of the loan for a short period, a floating rate will be favourable for you.
ICICI Bank Loan Against Property is available for a period of 15 years. Choose a longer tenure to enhance the loan eligibility. To minimise the cost of the loan, you can opt for a shorter tenure. Lenders typically decide the loan tenure based on age. A younger applicant can get a longer tenure. But if the applicant is nearing the retirement age, then the tenure will be lower.
#9. Property Insurance
Lenders will be more conducive to considering the loan application if the property to be mortgaged is insured as it gives a sense of additional security to them.
Axis Bank loan against property is the best option for immediate financial requirements if you take care of the above factors. But you should be aware that the property mortgaged will be at risk if you fail to make timely repayments. Keep this in mind while exercising the option.