The interest rate is a factor that can make or break your loan against property hopes. Although all banks have a fixed range in which they charge, the final loan against property interest rate can be different for different individuals, based on certain factors. But what are those factors? And, what can you do to decrease the interest rates? Read on andlearn more below.
- Property evaluation
The collateral for the loan is your property and the state of your property, including the current price, will affect the interest rate directly. When you apply for a loan against property, you will be required to submit certain documents, which can prove that you have ownership of the property. The bank will thoroughly check these documents and make sure there are no disputes, and all the information is correct. Not only that, but the lender will also do a physical evaluation of the property. They will consider factors like how old the building is and how much demand the property has in the market.
Tip: Making sure all your loan against property documents are clean and up to date can go a long way here. Since the state of the property also matters, keeping the property clean and presentable could also help you.
- Credit score
Even when you are taking out a loan against a property, your credit score becomes an important parameter that can decide your interest rate as it can show your repayment capacity and risk. A higher credit score means that you have a good repayment history and lenders see a lower risk of you not being able to repay your loan and hence, will offer you lower interest rates.
Tip: Keeping a good credit score is greatly helpful. Although it could differ for different banks, a credit score of above 750 can make you eligible for a lower loan against a property interest rate.
- Your income
Lenders will want to know if you have enough capacity to pay EMIs monthly. For this, they will ask you for your income documents like salary slips or bank statements. If the lenders think your income is not adequate, they might offer you a higher interest rate as the risk associated will be higher.
Tip: Making sure you have proper income is important as it shows your ability to repay. If you think your income is not enough, you could apply for a smaller amount. You can use a loan against property EMI calculator to figure out EMIs for your desired loan amount.
- Your employment history
Your employment history also has a vital role when you apply for loan against property. Employment with a reputed company shows lower risk as there will be more job security. This can result in the lender offering you a lower interest rate.
Tip: If you think your employment history is not your strong suit, you could add a co-applicant, like your spouse or parents, if they have a better job history. This could help you in getting a lower interest rate.
Make sure you use all the above information while you apply for loan against property to ensure loan against property eligibility and lowest interest rates.