Your CIBIL score is one of the key components that is considered by banks while evaluating your loan applications. It depicts your creditworthiness and repayment capacity, which further helps the lending institutions in the loan application process. Higher your CIBIL score,more the chances of your loan approval.
It is always beneficial to maintain a healthy CIBIL score to be eligible for availing loan against property at lower interest rates, hassle-free process, and minimum documentation with lesser processing time.As far as Loan against Property (LAP) is concerned, there are no minimum CIBIL score criteria as defined by private and public sector banks, Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs) or other lending institutions.
However, maintain your CIBIL score ofat least 650 or above and as close to 900 to be eligible to apply for a loan against property.
If you are new to the financial market and less aware of the term ‘loan against property’, then first let’s understand its meaning and further discuss various other related aspects, such as its features, types, purpose, etc.
What is a Loan Against Property (LAP)?
A loan against property is a type of secured loan that can be availed by keeping residential and commercial properties with the lending bank in the form of collateral or security. If in case the applicant is unable to repay the full loan amount in time, then the lender has the right to liquidate the kept property in the form of collateral and recover its outstanding dues. The risk involved for the lender is minimal and the applicant has the option of securing a loan of large amounts.
How Does Your Low or Poor CIBIL Score Affect Loan Against Property?
Your CIBIL score is calculated and generated by India’s leading Credit Information Company (CIC) or credit bureau named as TransUnion CIBIL, which considers various factors while preparing your Credit Information Report (CIR). Some of the key factors that help in generating your CIBIL score and determining your LAP eligibility include your repayment history, credit utilization ratio, number of hard enquiries, credit variety, etc.
If in case you have a low or poor CIBIL score then the chances of your loan approval becomes marginal. Try maintaining it above 650 out of 900 to be considered by the potential lenders. Usually, a decent CIBIL score of 750 and above is considered good by lending banks and NBFCs.
Features of LAP
Find below the basic features of LAP that most lending institutions offer to leverage your property more efficiently:
Features
- Interest Rates: 9.25% p.a. onwards
- Loan-To-Value (LTV) Ratio: Up to 65% of your property’s value
- Loan amount: Maximum up to Rs. 10 Crore
- Repayment Tenure: Maximum up to 15 years
- Foreclosure Charges: Nil
- Processing Time: Within 48 hours
- Funds disbursals within 72 hours of approvals
- Flexible Repayment Tenure
Note: The above-mentioned features are basic in nature and shall vary as per lender-to-lender and applicant-to-applicant.
Types of Loan Against Property
Below stated are various types of LAP that are commonly used by potential borrowers:
- Loan Against Residential Property
- Loan Against Commercial Property
- Lease Rental Discounting
Based on an Applicant’s Employment Type
- Loan Against Property for Salaried
- Loan Against Property for Self-employed
Based on the Applicant’sUsage
- Loan Against Property for Housing Purposes
- Loan Against Property for Business Expansion
- Loan Against Property for Debt Consolidation
Purpose of LAP
LAP is majorly used to meet various below-mentioned requirements, as it comes with no spending restrictions:
- For business development and expansion
- For debt consolidation
- For home or business improvement or renovation
- To meet medical emergencies
- To fulfil overseas education fees and much more
Loan Against Property Calculators
Before applying for a Loan Against Property, make sure to check the eligibility from each of the below-mentioned calculators:
- Loan against property EMI calculator
- Loan against property loan to value calculator
- Area conversion calculator
- Loan against property eligibility calculator
Conclusion:
Usually, lenders may charge 3%-5% extra interest rates on loan against property applications from applicants having low CIBIL scores as compared to those with high credit scores. Therefore, keep in mind that your low or poor CIBIL score can always become a hindrance in availing funds to meet your urgent financial requirements. As there is no minimum CIBIL score requirement by the banks or Housing Finance Companies (HFCs), still you should maintain it as high as possible for smooth functioning of your loan process. Lastly, you should keep a regular check on your CIBIL report for errors to rectify them at the earliest and dedicatedly follow measures to improve your CIBIL score gradually.
