There are quite a few factors, which affect the property loan interest rate for a borrower. These factors are discussed below in detail.
CIBIL score: These 3-digit numbers represent credit risk associated with an individual. Financial institutions check this score not just to decide a rate of interest for their applicants, but also to assess if a borrower’s application should be approved or not. Typically, a score of 750 or above is considered healthy.
Existing debts: Financial institutions check a borrower’s existing debt obligations to assess their financial credibility in repaying a new line of credit. As a result, these also affect the property loan interest rate, which is offered to an applicant.
Value of property: Value of a mortgaged property also affects the interest rate offered to an applicant. This evaluation includes the size of a property, its location, its age, etc.
Loan tenor: Loan against property tenor is another crucial factor that affects its interest rates. Usually, lower rates are offered to individuals who apply for short tenors.
Age of an applicant: Another property loan eligibility criteria is an applicant’s age. Older applicants are deemed riskier by lenders, leading to higher rates for these consumers.
Along with these factors mentioned above, borrowers should also check the various loan against property eligibility criteria to avoid their application from being cancelled. Additionally, it is also advisable to arrange every necessary document beforehand to avoid any chance of delay or disapproval.