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A Loan Against Property as the name suggests is a loan taken by the borrower from a lender by mortgaging an existing property that can be residential or commercial in nature. It is a secured loan where the borrower gives a guarantee by using his property as security. The loan amount sanctioned by the lender is based on certain percentage of the property's market value, which is usually around 40% - 60%. The interest rates for loan against property range between 12%-16%.
Keeping your credit utilization low is also a key factor to improve your credit score. Credit institutions usually take between 30 and 45 days to submit data to the Credit Information Bureau Limited. However, if you purchase your credit report within 45 days of the last due payment, it may not be updated. This reflects an amount overdue or inaccurate balance in the CIBIL report. Regularly monitor the credit history and score by using a credit report. Yes, your CIBIL score can impact your eligibility for a home loan.
Work on Your Credit Score
Focus on a balanced number of unsecured and secured loans instead of juggling between way too many unsecured loans. If the borrower defaults in paying dues on time, it will not only affect your records but you might also have to pay the debt on his/her behalf. CreditMantri will never ask you to make a payment anywhere outside the secure CreditMantri website.
Lenders extend their best loan offers to borrowers they can trust with repayments. Your CIBIL score denotes your repayment capability -- the higher your credit score, the better your chances of getting a good Home Loan deal. So, before applying for a Home Loan, make sure your CIBIL score is at least 750. CIBIL Scores are measured on a scale between 300 and 900, with 900 indicating the highest and 300 being the lowest.
Significance of CIBIL Score For Home Loan
However, lenders usually consider 650 as the minimum CIBIL score required for a home loan. Scores ranging between 550 and 649 are average and need working on. Bad scores are the ones that fall in the 300 to 549 bracket. Finally, NH or NA implies that you do not yet have any credit history. Lenders prefer that a customer’s CIBIL score for a home loan be around 700, if not 750 and above.
The most important thing before availing of a home loan is to have a proper insight into documents. Priorly preparing documents makes the process of a home loan simpler & smooth. These documents help banks to check your eligibility for a home loan. This helps you consolidate all your debts and pay them all off at once while creating a new repayment schedule based on your financial preferences.
Factors that Affect your CIBIL Score
Now that you know how to increase your CIBIL Score, start working on it today. Make sure you have a good credit score when applying for a home loan. A credit score or CIBIL score plays a crucial role in determining the approval/rejection of your home loan application. The first thing the bank checks is your credit score as this gives them an idea about your credit worthiness. Generally, rejection is faced when the cibil score is less as it shows that you have a bad credit history. However, the most common good score is considered above 750 and less than 750 is regarded as a bad credit score.
Borrowers need to raise this request in case their CIBIL score is low due to irregular past repayments. Your CIBIL Score provides lenders an indication of your credit health. Understand how your CIBIL Score facilitates the loan application process. You can repair your credit profile by rebuilding it from scratch without spending one penny further.
When you have a pre-approved offer, applying for a loan and availing it of becomes easy since the lender has already pre-approved you for a loan. Once you have made a Home Loan application, one of the first things that your lender will do is connect with one of the credit bureaus in India and ask for your credit report or CIBIL score. Home Loan applicants must know that their credit score is a crucial determinant in deciding whether their Home Loan application will be accepted or rejected.
Both the loan principal amount and the interest paid towards repayment of loan provide tax benefits under Section 80C and Section 24 of the IT Act respectively. However, please check with your accountant to know more about these benefits. Lenders check your CIBIL Score before approving your loan application. The higher your score, the higher are the chances of your loan application getting approved.
Out of which, cibil score or credit score plays a vital role. Usually, for people with low CIBIL Scores, it is advised to wait around 12 months before any fresh application for loans or credit cards. Waiting for a year, and meanwhile regularly repaying existing loans during this period, increases the CIBIL score to a great extent. Reach out to your bank or financial institution for increasing your credit card limit which will eventually help you in keeping your limit restricted.
CIBIL score plays a huge role in determining whether you are eligible for a home loan or not. Lenders keep an eye on your CIBIL score to understand and intercept the criteria of home loan eligibility of an individual. The minimum CIBIL score for a home loan in India varies across lenders.
Having said that, a low CIBIL score usually is a deterrent for many lenders to give a Home Loan, and you must try to increase your CIBIL Score. Some effective methods to improve your score include paying off all your debts, regularising your loan repayments, raising a credit repair request, etc. Keep reading to know more ways that can help you improve your credit score in no time.
To increase your Home Loan eligibility, clear some loans before applying for a new one. Aspiring Home Loan borrowers are offered a loan based on whether they meet their chosen lender's eligibility criteria. If you are a first-time home buyer, you must understand how to increase Home Loan eligibility -- this will help you avail of a loan on good terms and conditions.
Thus, applying to NBFCs for a Home Loan has a higher chance of the loan getting approved, than with banks. A score below 650 is considered high risk, and lenders may reject Home Loan to such applicants. Some nationalized or private banks may have a cut-off of 650, while some Non-Banking Financial Companies may be lenient and consider a score of 550 as the lower limit. While a CIBIL score proves your financial mettle, being able to service a loan hinges on another parameter as well, such as your debt-to-income ratio.
You can get a home loan under Fullerton Grihashakti with this score with strong chances of home loan application approval and reasonable terms like interest rate, tenure, and loan amount. At 600, your creditworthiness is doubtful and there are high chances that the lending institution will reject your application for a housing loan. Low CIBIL scores mean that you may still apply for the home loan but the interest rates will be higher. Also, extremely low scores might impact your chances of getting the loan approved.
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