CIBIL Score – What role it Plays for Loan Against Property

There is no doubt that the loan against property (LAP) is a finance mode where you can avail a higher amount, pledged against a property that you own. The ‘to be mortgaged property’ could be a piece of land, a house, a flat, a rented house, etc. 

The final amount that you can get as the loan against property may depend on its existing market value and not at what you bought it. 

The loan against property is a secured loan and comes with a lower interest rate. Yes, compared to unsecured loan like personal loan, the loan against property interest rate is lower. Hence, you may grab an amount as high as up to Rs.1 crore for salaried and up to Rs.3.5 crore for self-employed. 

However, to help you finally provide you with a lower loan against property interest rate or its approval, many factors are considered. 

Apart from some elements such as the desired loan figure, property’s market worth, loan tenor and others, your CIBIL Score pays a major role. Yes, the lender also takes your Credit Score as a basic parameter in determining your LAP eligibility. 

The higher is your CIBIL Score; the better are your chances of acquiring the loan against property at an affordable interest rate. 

Why is your CIBIL Score so Vital?

Your Credit Score is the mirror of your creditworthiness and also replicates your capacity to repay the desired loan. Most of the lenders assess CIBIL Score as the basic parameter. Yes, they do that while processing your loan against property application. It is a benchmark on which the lender decides and calculates your loan default risk. Hence, it becomes vital for any loan applicant to have a robust CIBIL Score before applying for a loan.  

Anyone having a CIBIL Score of 750+ or more out of 900 can easily get a loan against property approval at an affordable rate. People with poor CIBIL Score may either not get the LAP approval in the first place. Even if they get it, it may be at a higher rate of interest, and you may also get a lower than desired loan amount. 

Banks are strict about an applicant’s Credit Score. As a result, if you don’t have a robust score, there are higher chances of getting the approval for the loan against property.

On the other hand, non-banking finance companies (NBFCs) are more flexible. They may still provide you with the desired loan amount with a lower CIBIL Score. 

However, to approve a loan under such situations, they may charge a higher loan against property interest rate.     

Do you have a healthy Credit Score? If yes, you can also grab flexible and longer tenor to repay the loan in smaller EMIs without hurting your finances. 

What Factors Measures the Credit Score?

Your CIBIL Score may be computed based on many factors such as: 

  1. Payment History – If you made timely payments or defaulted shows your probable attitude towards payments. It accounts for 35% of the score.  
  2. Amount Owned – How much you owe also calculates the Score. The higher is your held amount; the lower will be your score. It makes for 30% of the score.  
  3. Credit History Length – The longer is your credit history, the higher will be your Credit Score. It accounts for 15% of the score. 

You are now aware of how your Credit Score is a prime eligibility factor in helping you get the loan against property approval or not. 

If you wish to apply for the LAP, ensure to check and work on your CIBIL Score to grab the approval at a lower interest rate. Bajaj Finserv offers some remarkable pre-approved offers on loan against property, home loans, and personal loans and more. By applying for such offers, you can go through the entire loan processes easily and faster. You can check out your pre-approved loan offers right away by sharing some of your basic personal information like name, and mobile number.   

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