Loans against property are a type of secured loan. In the case of these loans, a borrower pledges a residential or commercial property as collateral and in return, receives loan money. Most lenders maintain a LTV ratio of 50 to 60% in the case of loans against property. In simpler words, when a borrower pledges their property, they can receive up to 50% of the property’s value as a loan. Loans against property give borrowers immediate access to a substantial amount of money and can prove to be a great financing tool, especially in times of a financial emergency. However, loan against property approval does not come easy for everyone. Here are a few tips that will help you improve your eligibility for the property 

–  If you have already have too many loans, no lender will agree to sanction you a loan because your debt-to-income ratio is already too high and a considerable part of your income is already going towards covering EMIs. In this case, if you want to improve your chances of loan approval, clear off some loans and reduce your debt-to-income ratio. This will help you enhance property loan eligibility. 

– If your eligibility for the property loan is low, you must consider applying for a loan with a co-borrower. This co-borrower must be someone who has an excellent credit score and excellent financial standing. When you apply for a loan jointly, your lender will combine your incomes to assess your repayment capacity and that is why your eligibility for the property loan will automatically improve in this case.

– Most people think that since loans against property are secured loans, their income is irrelevant. This is not true. A lender will sanction a loan against a property only if your income supports the EMIs you wish to take. If you are planning to apply for an amount higher than what you are eligible for, make it a point to include all additional sources of income to your loan application. This will help you establish that you can afford the EMIs you wish to take. 

– One of the first things that lenders check when a borrower applies for a loan against property is their credit score. If your credit score is low, your loan application will get rejected. So, before applying for a property loan, check your CIBIL score. If your CIBIL score is below 750, follow these tips to improve cibil score. Improving your CIBIL score is easy — pay all your EMIs and credit card bills on time, never exhaust the limit on your credit cards and try to clear more than the minimum amount due each month, limit new credit card and loan applications and maintain a healthy credit mix. Doing these things will make your CIBIL score hit 750 quickly.

– Lastly, to enhance your eligibility for a loan against property, apply to a lender with whom you already have a rapport. If the lender has known you for long, they might be willing to offer you a loan even if you do not have all the documents or if your loan eligibility is low because they know your financial standing and your attitude towards credit in general.

Loans against property are a safe and convenient way to raise money. However, these loans involve collateral and therefore, one must avail of these loans after proper planning and when they are convinced they can afford the loan EMIs.