financial

How Is A Loan Against Property Processed?

A loan against property is available from most of the banks. It’s a secured loan, so there is a little hassle in getting the loan approved. You should know how a loan against property is processed. You need to fill in an application form for the loan with your details. It should contain the present state of your employment or business and the details of the property you are pledging. There are options for filling in an online application form also. You must gather information on the terms and conditions of loans by various lenders. Once you get the loan, you are supposed to pay back based on an EMI. The loans availed from banks can be checked with the EMI calculator which can be easily found online that you can use to see the amount of EMI. 

Processing of Loan

After this formality, a representative of the bank will contact you. He will verify your papers containing the details of the property, the job you are doing, or the business. There is a way of checking your credit score too. You will be getting a loan offer based on this information.

Submission of documents

  • In this step, you are required to submit the documents on your eligibility for the loan against property.
  • These documents include identity proof, address proof, proof of income, and papers on the property you are pledging. It will validate your application. You may be asked to submit some additional documents based on the lender.
  • Some banks have got doorstep service. Someone from the lender will come to your residence and collect all the papers.
  • Once you have submitted the documents, the lender will verify them. They will verify the property document, income, employment status, etc.
  • Once the verification is done, the lender will make an offer of a loan. It means that your application for a loan has been granted. You are considered creditworthy.
  • Once you accept the offer, the second phase of verification begins to ensure the property you pledged is genuine, properly valued, and there are no disputes over it.
  • After this step, the loan amount will be disbursed to your account or the account of the builder. The duration of this entire process varies from lender to lender.
  • While selecting a lender, you should remember that the loan process shouldn’t take too much time. You should also check the amount of interest charged by the bank with the help of an EMI calculator available online and also check whether there is a floating interest rate or a fixed one.

Some Points to Keep in Mind Before Applying for a Loan

When you are pondering over taking a loan, you should check your financial capabilities. You must pay the EMIs in time so that you don’t have to pay any penalty. The bank may ask you to show a minimum income from salary or other sources. The amount varies from city to city and bank to bank. It is advised that you pay a higher down payment. The more down payment you pay, the less will be the EMI. The less money you borrow, the less money you have to repay. You may get a lower interest rate also. it happens because the lender will have a lesser risk of paying you.

Most lenders check your CIBIL score before approving the loan. Your CIBIL score will tell how creditworthy you are. It shows that you have no or minimum liabilities and that you have not defaulted on your loans in the past. You must have a clean financial record to have a better CIBIL score. You must clear off all your financial debt including your credit card debt. Don’t apply for a loan unless you are sure of getting sanctioned. Hence, you must choose your lender carefully. You can consider having a co-applicant who can be your spouse or one of your parents. in this case, the income of the co-applicant will be clubbed with yours and your possibility of getting the loan sanctioned will be enhanced. It will also assure the lender that the loan will be refunded in time because you are not the lone borrower.

You should be reading the loan documents and the application form carefully. An incorrect application form may result in the application getting rejected. If you read the application thoroughly, you will be assured that there are no hidden clauses that might have skipped your attention. These hidden clauses will land you up in trouble later on. On your part, you should not hide any information that you are supposed to come clean of.

Talking about home loans, one can consider applying for PM Awas Yojana alternatively, which is a Government of India funded scheme which intends to provide housing for all in urban areas by the year 2022. As per the Credit Linked Subsidy Scheme, beneficiaries for the PMAY scheme are eligible for an interest subsidy if they borrow a loan to purchase or construct a house. This interest subsidy will be provided on housing loans for acquisition/construction of houses. You can apply on PMAY official website and later you can check if you have been accepted as a beneficiary or not in the PM Awas Yojana List. The PMAY list for beneficiaries is very important as it shows who all can be considered as beneficiaries under the Pradhan Mantri Awas Yojana.

Tips to Improve Home Loan Eligibility:

You should pay attention to your credit report and try to see if there are any errors. Any error might restrict your home loan application. You must correct if you come across any errors in your credit report. You may have to contact your financial institution if the error has occurred at their end. You can get it corrected by them. So, it’s important to see if the fault lies on their part. Whenever you find any request from your lender, you must promptly respond to them. If you don’t respond quickly, the loan sanctioning process will be delayed. Rejection of a loan application is something you should avoid. In a nutshell, you must calculate your pending liabilities before applying for a home loan to keep your credit report healthy.

You should disclose all important information during the loan application process because this is important. You should be very honest with them. It will avoid your loan application from getting rejected or delayed. You should use the EMI calculator to avoid home loan rejection.

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