Loan Probability: What are the chances to get personal loan?

The real estate investment is all about purchasing land and then getting high returns on it. Whether you wish to build your dream house or invest in future development, real estate makes for an ideal option for you. But you should also keep in mind that purchasing land and properties isn’t easy unless you have enough cash to pay upfront. However, worry not as there are always land loans or plot loans which you can obtain by mortgaging your pre-existing property. 

In this article, we would learn about land financing and how you can secure a personal loan. Let’s take a look at various factors influencing the probability of securing a personal loan for land purchase.

What Are Land Loans?

Going by the simple definition – Land loans are loans that you can avail yourself of to purchase vacant land or plots. You can use these loans for various purposes such as residential construction, agricultural use, or even investment. In comparison to other traditional mortgage loans, land loans may have different terms, interest rates, and eligibility criteria.

Read more: What are the top 7 benefits of personal loans?

Factors Influencing Loan Probability

Creditworthiness

Yes, creditworthiness is a significant factor that determines whether you are eligible to get a land loan or not. With this creditworthiness, lenders actually assess your financial abilities by checking your credit sore and employment history. Lenders also assess your debt-to-income ratio to understand if you would be able to repay the loan.

Loan Purpose

The purpose of the loan is also important as lenders are often more inclined towards financing land purchases for residential and recreational purposes.

Property Location and Value

The location and the appraisal value of the land you are going to purchase also make a significant impact on loan probability. This is mainly because lenders easily approve loans for land in desirable locations with proven market demand. Moreover, the appraisal value should justify the loan amount you have requested.

Read more: How to get personal loans for the self-employed in India?

Down Payment

A down payment is the amount you pay upfront on purchasing land. The more the down payment, the better the chances of the loan getting approved. It is because when you pay a larger down payment, it reduces the loan-to-value ratio and this eventually demonstrates your commitment to the loan. 

Lender Policies & Requirements

Different lenders may have varying policies, requirements, and eligibility criteria for land loans. It is extremely important to research and compare lenders specializing in land financing to find the best fit for your needs. Some lenders may offer competitive interest rates, flexible terms, and personalized financing solutions tailored to land purchases.

Why should you go for a personal loan for your housing needs?

Opting for a personal loan for housing needs can be a practical solution in certain situations. While personal loans are not usually designed for mortgage purposes, there are instances where they can be advantageous for housing-related expenses. Here are several reasons why you might choose a personal loan for housing:

Flexiblity

Unlike traditional mortgage loans, which are specifically tailored for purchasing or refinancing real estate, personal loans offer flexibility in how you can use the funds. You can use a personal loan to cover various housing-related expenses, such as renovations, repairs, down payments, or closing costs.

Get Instant Access to Funds

Personal loans typically have a faster application and approval process compared to mortgage loans, providing quick access to funds when you need them urgently for housing-related expenses. If you’re facing a time-sensitive situation, such as a home repair emergency or an opportunity to purchase a property, a personal loan can offer expedited financing.

Read more: How to apply for a personal loan without any income proof?

Smaller Loan Amounts

If you need to borrow a relatively small amount of money for housing-related expenses, a personal loan may be more suitable than a traditional mortgage loan, which often involves larger loan amounts and longer repayment terms. Personal loans allow you to borrow smaller amounts, making them a practical option for minor repairs, upgrades, or other housing expenses.

No Collateral Needed

Personal loans are typically unsecured, meaning you don’t need to put up collateral, such as your home or other assets, to qualify. This can be advantageous if you’re hesitant to risk your property as collateral or if you don’t own a property to use as collateral. However, it’s important to note that unsecured personal loans may come with higher interest rates compared to secured loans.

Conclusion

Securing a personal loan for land purchase entails managing various factors, including creditworthiness, loan purpose, property value, down payment, and lender requirements. While obtaining financing for land may pose challenges compared to traditional mortgages, it’s not insurmountable with careful planning, research, and preparation. 

By understanding the factors influencing loan probability and working with reputable lenders specialising in land financing, you can increase your chances of realising your aspirations of land ownership and investment. Remember to weigh the risks and benefits, explore financing options, and consult with financial professionals to make informed decisions aligned with your goals.

If you are thinking about going for a personal loan, then consider choosing Airtel Flexi Credit for your needs. Instant approval, fast credit disbursal, 100% digital application process and much more, only with Airtel.