Chances of getting a loan if you have a steady rental income
Loans on both commercial and residential properties
Taking out a loan from rental income is a strategic financing option for property owners. Individuals who are getting a fixed income from rentals are more likely to get necessary funds in the form of loans for home repairs or renovation, investments, or personal financial goals. It is said that the rental income is stated as a guarantee for the loan. At present, that loan is provided by banks, non-banking financial institutions, and housing finance companies. Loans are granted according to the amount of rental income. Giving the respective properties to any prominent institutions and companies is also taken as a standard for granting loans. However, these factors may vary from bank to bank.
How to qualify…
The property earning rental income must be owned by you. It must be a commercial property generating regular rental income. Some banks and institutions also provide this loan for residential properties. They prefer properties that generate stable rental income. Also, your credit score and financial history also play a role in loan approval and interest rates. Lenders are likely to ask for the value of your property.
Here’s what to do to take out a loan:
Check whether you meet all the eligibility requirements set by the lenders, like property ownership, stable rental income, your credit score, property value, etc. After that, all documents related to these should be obtained. Documents proving ownership of the property—rental agreements, bank statements, income tax returns, ID proof, address proof, and property photos—are required. After that, you have to apply for a loan at the bank or financial institution of your choice. Such documents should also be submitted along with the application. Then the bank or that financial institution will examine your documents, along with details like property market value and rental income. After the scrutiny, the processing fee required for the loan has to be paid. The lender will then release your loan in a lump sum. After the scrutiny, the processing fee required for the loan has to be paid. Then the loan will be released as a lump sum or in installments.
Instructions to borrowers…
The lender will consider rental income and expenses at the time of loan sanction. Hence, the exact details of these should be kept close.
In terms of getting a loan, the offers of various banks and financial institutions should be weighed. Look for low-interest rates and favourable terms and conditions.
Read and understand all aspects of the loan agreement, including interest rates, tenure, prepayment penalties, and early termination options.
There should be a definite repayment plan so that the loan payment does not stop. Otherwise, your credit score is likely to be affected.
