There are times in an individual’s life where they might be facing a cash crunch and need to pay their kid’s academic fees or cover for a medical emergency. Now, these expenses are essential and cannot be avoided, which is why dealing with them is of the utmost priority. If you are in a similar situation and need financial assistance, one effective way is to apply for loan against property. This is a secured loan and proves to be an ideal solution for anyone needing financial support.
Now, before applying for the loan, it is important to understand the loan amount you are eligible for. There are ways in which the eligibility for a loan against property can be improved and knowing them could benefit your cause.
So, take a look at the following 5-step plan that can improve your eligibility for a loan against property:
- Mention any additional sources of income
It is possible to have multiple sources of income and not just the one from your job. Having more than one source of income increases your repayment capacity. This in turn improves your eligibility for a loan against property.
- Improve your credit record
The first thing that financial institutions do is check an applicant’s credit score. Lenders only prefer borrowers with a decent credit score, as this is an indication that they repay their loans on time without any defaults. By maintaining a credit score of 750 or more, you can improve your loan against property eligibility and are offered a loan with favourable terms.
- Choose a longer repayment tenure
Choosing a short repayment tenure would result in higher monthly instalments. Some borrowers choose a short tenure to repay the loan faster and to save money on the interest by cutting down the number of monthly instalments. However, to improve your loan against property eligibility, it is better to opt for a longer repayment tenure. Paying off smaller EMIs towards the loan increases your repayment capacity, which lowers the risk for the lender.
- Clear any existing loan obligations
If you are already paying off EMIs from other existing loans while applying for a loan against property, it could lower your eligibility. This is because; paying off multiple loans lowers your repayment capacity. This is why it is advisable to clear all existing loans before applying for a loan against property to improve your eligibility.
- Apply for the loan with a co-applicant
If you are applying for a loan against property with a co-applicant who is also an earning individual, your chances of getting a loan approval increase. With two earning co-borrowers, the loan’s monthly instalments can easily be paid off, and this reduces the lender’s risk.
Once you have improved your loan against property eligibility, the lender is more likely to approve the loan application faster. To make sure that the entire loan process is smooth, make sure to keep the documents required for loan against property ready with you.