Saturday, 15 July 2017

Influencing factors to your LAP tenure, Know them!

Are you planning to apply for a Loan against Property? Before you meet a bank or financial institute for the purpose, it is important to understand about the various factors pertaining to LAP. Like other loans, the funds are advanced keeping a property as mortgage and you are expected to repay via EMIs till the maturity of loan tenure. The rate of interest and duration of loan depend on your credit profile and certain other factors. The maximum permissible loan tenure can be up to 15 years for mortgage loans.

Let’s discuss here some of the elements that a lender considers for finalizing the tenure.
Loan amount
Lenders generally have a tendency to offer a longer tenure to add to the eligibility of the loan. Banks or NBFCs generally offers tenure of 5-15 years on LAP. The higher the loan amount, the higher would be the term of the loan. However you should extend the tenure according to your repayment capabilities. The longer would be the term of loan, the total cost of loan would rise too.
Age
Your age plays a fundamental role in deciding the tenure. Say, if you are in your 30s; you can go for a higher tenure, however, if you are nearing your retirement, you are eligible for a short duration loan. Most of the lenders; banks or NBFCs are hesitant in approving a loan past retirement age.
Age of the property
The age of the property you intend to mortgage is one of the major factors for your application to be sanctioned. Even supposing your building is approved by the government, the age of the building would play a significant role in deciding the tenure of loan. The residual age of the property basically defines the permitted tenure. 
Say, the age of building you are planning to mortgage is 15 years, and the age cap is 30 years, in that case the highest permissible term for your LAP would be 15 years. While if your property is 20 years old the highest term for which you are approved would only be 10 years.
Income
As a borrower it is essential to have a regular and a sustainable source of income. Your net income and costs (expenses) are the most important factors that leave an impact your loan tenure. There are a number of online EMI calculators available that help you assess your income and expenditure to give the best loan opportunity with the most favourable tenure.
EMI
Your EMI (Equated Monthly Instalment) plays an imperative responsibility in deciding the tenure of your LAP. If you are looking for a low EMI, it will result in a longer loan tenure while, if you are comfortable with a higher EMI, you may choose a shorter tenure.
Mortgage interest rates
It is recommended to cautiously analyze and try to reach at the most favourable balance in terms of loan tenure, EMI and rate of interest.
Cibil score
The lender considers your CIBIL score while assessing your credit worthiness and deciding on the permissible loan tenure. So it is important to improve CIBIL score when before planning LAP or any other long term loan.
Is your low credit score bothering you?
A good credit score is essential to get a LAP approval. If you have a bad score, one common worry that is running through your mind is probably how to improve your CIBIL score? Improving credit score for LAP is not something unworkable, but requires time. Don’t run after a company that advertises that they can fix your bad credit score and increase it by 100 to 150 points in just a few months. Beware! It might be a scam.
It takes some time for bad credit fix. Let’s discuss on how to make you eligible for LAP despite the low cibil score.
·         Pull your free CIBIL report and study it to know where you stand.
·         Watch the credit card balances
·         Avoid applying for new loans and credit cards
·         Reduce Loans
·         Avoid applying for new loans and credit cards
·         Seek professional help
·         Request goodwill adjustment on any negative items on your report

It is important to keep in mind that if you have a bad credit score that doesn’t mean you’re a defaulter. This could happen because you are an unorganised person. By simply following the above rules you can take a first smart step to improve your score and avail the desired loan.

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