Business owners may seek financial assistance to meet funding requirements related to working capital or business expansion. One of the ways to achieve this is by availing of a versatile financial product known as a loan against property or mortgage loan. This loan enables individuals to leverage the value of their commercial or residential property to obtain funds.
Our comprehensive guide will help you understand the benefits of a loan against property, factors that affect your loan eligibility, and the process of applying for it.
Overview of a Loan Against Property
A mortgage loan is a type of secured loan that allows eligible borrowers to benefit from a sizeable sanction, competitive interest rate, and flexible repayment tenor. To determine your eligibility, lenders assess you against certain predetermined criteria, known as eligibility criteria. While these criteria can vary based on the lender, some general parameters include your income, age, occupation, credit score, and the property’s market value.
Before applying for a Loan Against Property, it is advisable to know your eligibility and calculate the EMI to make informed decisions. Several online tools such as a loan against property EMI calculator and eligibility calculator can help you estimate your EMIs and assess the approximate loan amount you can borrow, respectively.
Factors that Affect Your Loan Against Property Eligibility
Here are some of the factors that affect your eligibility:
- Age and Income: Lenders consider your age as a determining factor when it comes to deciding the tenor, interest rate, or loan amount to be sanctioned. Younger applicants may benefit from a long repayment tenor as compared to those nearing retirement.
- Property Type and Valuation: The type of property that is to be pledged as a collateral also plays a key role. Lenders prefer properties with clear legal titles and adequate valuation.
- Credit Score: Individuals with excellent credit records are seen as responsible and reliant borrowers. Consequently, they have higher chances of getting approved for a loan at favourable terms.
- FOIR: Fixed Obligation to Income Ratio (FOIR) is another parameter that lenders evaluate to determine your repayment capacity. A lower FOIR suggests that the applicant has enough disposable income to pay off the loan, as compared to an applicant who has a high FOIR. Applicants with a lower FOIR can get approved for a loan at feasible terms.
Applying for a Loan Against Property: A Step-by-Step Guide
With the advent of online application forms, applying for loans has become simpler. For instance, to apply for a loan against property online with Bajaj Housing Finance Limited, you can follow the steps given below:
- Navigate to the Loan Against Property application form.
- Enter all the required details.
- Click on ‘Generate OTP’ and proceed to enter it.
- Once validated, fill in all the property-related and financial details.
- Submit the application form.
After submitting the application form, a representative will contact you for further guidance.
To summarise, a mortgage loan can be a convenient financial tool to meet business or housing-related expenses. Factors such as age, income, credit score, and property value play a significant role in determining your eligibility for a loan. You can access online tools to gauge your EMIs and know the approximate loan amount you can be eligible for.
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