The CIBIL score is an imperative part of your financial journey. It helps financial companies assess your creditworthiness. Essentially, it reflects your ability to make a repayment on the credit products that you avail. Therefore, lenders heavily focus on your CIBIL score when making a credit offer. So, what happens when you default with CIBIL? Well, the prospects of getting a credit product like a loan against property are heavily damped. There is a very low probability of being able to get a loan with a negative credit impression. However, the good news is that it is not impossible.
Lenders do offer a loan against property for CIBIL defaulters. This is because the type of loan is secured i.e you pledge your property to secure your loan. It reduces the liability risk for the lender as the amount can be recovered in case the borrower defaults. Read on to know more about getting a loan against a property with a low CIBIL score.
Offer a High-Value Property – It goes without saying, offering a high-value property will invariably increase your chances of getting a loan against property. When the value of the mortgage is high, the lender is likely to offer a substantially higher loan amount. The high value of the mortgaged property assures the lender of being able to manage the liability, in case of a default. So irrespective of the CIBIL score, a valuable mortgage property will fetch you a good deal on your loan against property.
Proof of a Stable Income – Lenders do look for stability in terms of the monthly cash flow. Having a stable and high source of income will strengthen your application profile. It lets you come across as an individual who has a good flow of funds. Thus, being able to repay your loan successfully. Ensure that you can portray your source of income effectively. If you have other sources, include them as part of your loan application.
Maintain a Low Debt-to-Income Ratio – The debt-to-income ratio is yet another important aspect that you must note when getting a loan against property with a low CIBIL score. It is the ratio of all the liabilities against the income. When the ratio is low, it reflects the high creditworthiness of the individual. Lenders are assured of your ability to pay the EMIs on time as you are not servicing loan accounts beyond your capacity. Having a debt-to-income ratio that ranges between 30% to 50% is a good way to secure a loan against property for CIBIL defaulters.
Rope in a Co-Applicant – Signing up a co-applicant when getting your loan against property is a good way to increase your prospects. It works to assure the lender, especially if the cosigner has a good credit score. The lending institution is also likely to offer a more lucrative deal with a lower interest rate.
Get a Guarantor – In the case that the CIBIL score is not extremely low i.e somewhere between 600 and 700, the lender may be lenient. However, you will have to get a guarantor who can support your application. The guarantor must have a good CIBIL score. Also, do note that a future default also reflects on the guarantor. Simply put, if you do default with loan repayment, the loan guarantor too is held responsible for the liability.
A loan against property is not an impossible feat with a low CIBIL score. However, the lender is likely to be much more stringent when assessing your eligibility. While the above-stated factors will help you secure the loan, you must also work towards improving your CIBIL score. Finserv MARKETS offers you a Credit Health Report. You receive an update on your CIBIL score and receive a detailed credit health check.