Loan against property is one of the common mortgage loans in India. Due to its features like low interest rates, quick approval, longer tenure and maximum loan amount disbursement, more and more people are opting for loan against property across the nation. Many leading banks and NBFCs offer loan against property to its customer with exciting interest rate and flexible loan terms. One can take a loan against property for commercial as well as residential property in his or her name.
Though Ruloans has made it extremely easy to apply for a loan against property via its online application system, your loan still can get rejected. To spare you from the pain of loan rejection, we want to prepare you with reasons as to why your loan against property may get rejected and what you can do to prevent it.
Check your documents
Having the right set of documents is very important when you apply for your loan against property. You should have your own as well as the property’s correct documents to get your loan passed. You will require submitting your KYC details along with your bank statements, salary slip or income proof for loan against property documents. Your property documents should also be up-to-date. The property should clearly be in your name as per the documents. Also, you should have the OC/CC details, plan copy of your property. If any of these documents have wrong names on it (spelling mistakes), are illegal or does not exist, your loan application will be immediately rejected.
Property with legal disputes
In loan against property application, banks and NBFCs check the property’s eligibility along with the loan applicant’s eligibility. If your property is illegal or going through any legal dispute, your loan application will get rejected. Also, if the property stand on illegal ground or has been declared as illegal by your local administrative body, it reflects negatively on your loan application. Banks and NBFCs avoid giving loan against disputed properties as it will result as a loss for them if the loan gets defaulted. So we suggest you to clear your property from any legal dispute and then put it out for loan. This way you won’t have to face any rejection.
Previous loan default
Have you taken a loan before and have been unable to pay it off? Your credit card debt mounted and you failed to pay it back? Well, all these reasons can have a bad impression on your loan application as lousy financial history. This gives a sense to the loan lender that you are not trust worthy and you won’t be able to pay back the loan given by them. Thus, they reject your application in a jiffy.
But you can avoid this by paying off your debt and credit card outstanding on time. Take your debts and credit card payments seriously. Plan your finances to avoid any late payment.
Having multiple debts can seriously burden your monthly financial budget. Your financial obligations can put you and your family’s financial health in jeopardy. If you have multiple debts then the bank and NBFC get a perception that you are already under a lot of financial debt and getting an additional debt on your budget may lead you to land up on a defaulter’s list. Thus your application may get rejected.
To avoid this, you can pay off your multiple debts before applying for this loan. At least bring down the number to a singular debt. If you are taking a loan against property to consolidate your debts, then let the lender know the same to avoid rejection.
No professional stability
Whether you are a self employed professional, businessman or a salaried employee, you should have a stable income source to repay your loan against property. If you have changed too many jobs in last one year or faced losses in your business, your loan application for loan against property will get rejected.
So make sure that you have been in your current job for at least a year and have gained a measurable profit in your business. If you are able to showcase a steady flow of income, your loan application won’t get rejected.
Default on age bar
If you are less than 23 years old or very close to retirement, your loan against property application may get rejected. Banks and NBFCs need assurance regarding your loan repayment capacity. If you are too young, you may not have a strong financial history as your guarantor and if you are close to retirement, your loan repayment capacity is assessed to be poor to zero in the coming years.
Ruloans has solutions for both such situations. You can get your parent or older sibling as your co-applicant for loan against property if you are very young for loan age bar. If you are close to retirement, you can get higher EMI option to pay back your loan against property.
Low credit score
Banks and NBFCs are very specific when it comes to credit score. They require a strong credit score from 750 to 900 to approve a loan against property application. If you have a bad credit score due to your poor financial history, your loan application for loan against property will get rejected.
To stop this factor from affecting your loan application, you can improve your credit score. To do so, you must know the factors affecting your credit score. So build a strong credit score and then apply for a loan against property.
Check your eligibility for loan against property here!