Your CIBIL score or credit score determines your ability to avail loans and credit cards on convenient terms. Thus, it is important to maintain a good credit score to access timely funds during emergencies. A good score will always fetch you a competitive interest rate and a hefty sanction faster and with more ease. There are several ways of upgrading your credit score and servicing a mortgage loan or a loan against property is one of them.
Read more about a mortgage loan and how to use it to upgrade your credit score.
What is a Mortgage Loan?
Also known as a loan against property, a mortgage loan is a secured debt that you can avail by pledging your property as security. The market value of such collateral determines your loan amount. Therefore, you will get a higher sanction when you pledge a well-maintained home in a well-developed or well-connected locality as compared to a dilapidated structure in a remote area. Considering that you wish to avail such a loan to repair your credit score, it is important to apply for an amount that you can repay easily and not further deteriorate your creditworthiness.
You can apply for a Mortgage Loan offered by reputable lenders like Bajaj Finserv. This loan against property features a high loan amount of up to Rs.1 crore for salaried individuals and Rs.3.5 crore for the self-employed at an affordable rate of interest. When you apply with Bajaj Finserv, you can qualify for the loan with ease by meeting simple loan against property eligibility criteria.
You can also enjoy a hassle-free loan disbursal thanks to the minimal loan against property documents required and quick processing of your application. To make your repayment convenient, Bajaj Finserv offers tenors ranging from 2 to 20 years. What’s more, with the Flexi Hybrid feature you can borrow as you go and pay interest only on the utilized amount. You can also choose to pay interest-only EMIs and repay the principal amount at the end of the tenor to manage your cash flow better.
Why use a mortgage loan to upgrade your credit score?
- Since your credit score is low, it is easier to avail secured loans as compared to unsecured loans. This is because the lender will have your pledged collateral as back-up to suffice for your credibility. Moreover, the higher the value of the collateral the better will be the loan terms you’ll get.
- As mortgage loans are secured, lenders charge a lower interest rate. You can use this to your benefit and repair your credit score without paying high-interest amounts.
- You can put your idle assets to the best use by pledging them to avail a low-cost loan.
How to use a mortgage loan to upgrade your credit score
- Start off by applying for a mortgage loan along with an earning co-applicant who has a good credit score. This will reassure the lender that they can recover the loan from the collateral as well as your guarantor in case you default.
- Lenders may offer a lower loan-to-value ratio considering your bad credit score. In a way, this is great as it increases your chances of loan approval, requires you to repay smaller EMI amounts, and reduces your interest outgo. A 60% LTV is ideal to build or improve your credit score.
- While a long loan against property tenor helps you repay the loan conveniently, it also increases your total interest charges. So, select an ideal tenor after thorough consideration of your monthly income and budget. Also, start planning for repayment well in advance so when you have a lump sum, you can use it to make a prepayment and repay the loan earlier.
Whether you have a low credit score due to repayment woes in the past or it is because you haven’t had a chance to build your credit history yet, you can improve your credit score by availing a loan against property in India too and build a healthy financial profile. Get started now and check your pre-approved offer to view your customized deal and expedite your financing right away.