Property loan is one popular loan product among borrowers. As a loan borrower, you can enjoy the ownership of your property without worrying about losing it. The personal loan enables individuals to acquire loans to purchase a property. Therefore, before getting any loan, one should notice that the interest rate offered is different from place to place.
Before applying for a personal loan to purchase a property, let's understand the different factors that affect your loan against property interest rates.
1. CREDIT SCORE
It has a significant influence on your interest rates. Your credit score is an analyzed statement of repayment of history, financial health, and creditworthiness. A lower credit score will result in high credit risk, eventually making the lenders go for higher interest rates. If you want to check if your credit score is eligible for a loan at a lower interest rate, you can check the same using Buddy Score. A higher credit score will ensure a lower risk by making the lenders more willing to offer lesser interest rates.
The credit report should be updated, and if it works favourably for you, you can be a worthy customer for the loan.
Factors like harmful activity,i.e., late repayment of dues, will affect the credit score. This action can lower the lender's confidence to give you a loan.
How to check the eligibility?
● Keeping track of the credit score can be done online by using a buddy score. A medium to good score can increase the chances of getting approval for a loan.
● Use a personal eligibility checker to know once eligibility.
2. Profile of the loan applicant
Your profile as a loan applicant will affect the interest rates. It is another deciding factor to get your loan; your application should show your age or whether you are a self-employed individual. Other information like place of residence, monthly income, etc., will also influence your interest rate.
Showing that you have a stable income will be considered less risky to get a loan, and lenders will provide a steady job holder with lesser interest rates. For instance - Doctors and CAs are deemed to fall under lesser interest rates while availing for loans.
Therefore having a good source of income and salary is very important; otherwise, the lenders may be unwilling to extend loans or may charge higher interest rates. Also, if you are a self-employed individual, you are likely to pay an elevated rate of interest.
3.DEBT - to - income
As a borrower, if you have an elevated DTI ratio, you might carry a higher risk during loan repayment. The percentage of DTI proves if the borrowers will be able to manage payments of the new debts, and DTI less than or equivalent to 50% is what the lender expects from one to have to get the loan approved. However, the preferred DTI can vary from lender to lender, but the consensus is around 50%.
ENDNOTE
When a loan is applied, the lender tries to assure some level of risk that might be present while giving credit to you. The interest rate that they charge is mainly the amount of borrowing the money based on some amount of risk. If your credit ratings are stable and are in red, you might have to pay more to avail yourself of the money in the form of higher interest. Also, you can even get an instant personal loan from Buddy loan, as they offer instant loans at an interest rate of 11% per annum with no collateral.
One of the most important things you should do before availing a loan is to be aware of your financial health. And in any case, if it's not in the desired position, you can work on improving your current credit score.
