Buying a home is the dream of many. Folks spend years saving up and then paying monthly EMI to own their dream home. But in addition to its being a space that you can call your own, your home has other advantages as well. Your home is one of the biggest financial security and largest source of financial strength. In most cases, it is the most valuable asset one would own in their life. And one way you can turn your asset into your financial strength is by opting for a loan against property.
A loan against property is a type of financing that is used by people to buy land or other real estates. But the loaned amount can be used as per the need; there is no restriction regarding that.
Can one get a loan against an old property?
There is no doubting the benefits that a Loan against property presents to the property owner. The benefits become even more pronounced when an individual needs to make some heavy expenses in their life. These include paying for their children's education, marriages, and more. Naturally, getting a loan against the property can be fruitful in such a situation. But the question is, can someone get a loan for their 50-year-old property?
The answer is yes. If the house is well-maintained, there is no issue with the loan process. Sure, there will be an evaluation needed to determine whether the structure is sound and to find the current value of the property, but one would not face any issues when getting a loan against their 50-year-old property.
However, it is crucial that the applicant understands that the loaned amount would be around 50% - 70% of the current property value. It could get even lower in the case of older properties.
How can one get a loan against a property?
Getting a loan against property is actually quite an easy process. In fact, in most cases, one would find that this process is even easier than getting a home loan or even a personal loan approved.
Here are the documents that you need to attach to your loan application.
• A recent passport-size photograph, not older than six months
• An identity proof, Aadhar Card and PAN Card would do
• Proof of Address
• Bank statement for the last three months
• Salary Slips for the previous three months
• Income Tax Returns for the previous three FYs
• In case the individual is a business owner, they would need to submit documents supporting the existence of the company, and the date of incorporation
• The property owner would need to showcase the property titles and add a copy with the application
The process of getting a loan against the property is a seamless process, but it is crucial that one find a reliable lending institution to help them out.
Tips that will help you get that loan against property quickly.
While it is true that getting a loan against property is an easy process, there are ways one can ensure that everything goes off without a hitch.
1. Ensure that you have a high credit score
To make sure that the application process goes as smoothly as possible, one must ensure that their credit score goes through the roof. It is the first criterion that any lending institution would look at. If you have a good credit score, not only will you find multiple lenders offering you various schemes, but you will find excellent interest rates on them as well.
2. Have a co-applicant
It is something that many loan applicants forget about. You are allowed to file a co-applicant with your application for the loan. It results in faster approval of the loan against the property application.
The co-applicant can be anyone, a member of your family, your spouse, or even your friend. If they have a separate income source, it would only help you get speedy approval.
3. Having a high and stable income is also beneficial.
Any lender would prefer to get their money back with interest rather than get into the process of taking over the collateral. By having a high and stable income, the applicant would gain the lender’s trust, resulting in a speedy approval of the application.
4. Previous relationship with the lender
Having an existing relationship with the lender also goes a long way in ensuring that the application goes not only as smoothly as possible, but one gets fast approval. In addition to this, there are other benefits that one can take advantage of, such as getting a better interest rate and loan tenure.
5. Debt to income ratio
The debt to income ratio of the applicant plays a crucial role in determining the speed at which the loan application would get approved. Having a good debt to income ratio helps in availing a loan against property.
6. Close any other loan application
In case you have any other existing loans, it would be best if you foreclose them before applying for a loan against property. It is also helpful to make sure the credit card utilization is below 30%.
Follow the above tips to the letter, and you will get your application approved in the blink of an eye.
