It is vital to do homework well before you apply for home loan. There’re many reasons because of that a loan application can be rejected by the bank. Also, you may not get right deal from the bank, if you’re not prepared in advance.
An applicant must do some homework such as:
Collating and collecting all the documents and keeping the originals and copies ready.
Knowing eligible loan amount in advance.
- Amount of funds he can contribute towards margin money – stereotypically, a lender provides a home loan to the extent of 80 percent of flat’s cost.
- After payment of EMIs, whether balance amount available, is enough to meet monthly expenses according to one’s lifestyle. For under-construction property, this may be crucial, as an applicant may also pay rent during the period.
Maintain a better credit track record.
One may have all essential financial documents and a good credit score, but the home loan application may still be rejected, if the lender doesn’t approve the home/project they have identified, or if the project has a specific title or legal issues, or it’s not registered under RERA, etc.”
These are factors, which impact how much home loan you will get.
However, the applicant should check whether the project is RERA registration, before making booking payment. Home loan seekers also ensure all other loan payments that include credit card payments made on time to maintain a healthy credit score. Filing of IT returns correctly and on time, will also help a lot.
Why home loans application rejected normally?
Not sufficient income to support a house purchase is the main reasons banks cancellation of the home loan.
“Annual net income after taxes, EMIs, minus expenses towards other loans and other costs, is the surplus available to a buyer. Home finance companies usually take 51-64 percent of the surplus, as possible for servicing the home loan and may sanction up to the times of such amount as the home loan. An amount may be short of the desired loan amount, in which scenario one has to look forward to a lower value apartment or bring in more of own capital, to avail the loan. Buyer can also add another family as guarantors and pledge surplus income, to meet loan requirement. One can also seek guarantees and assistance, if possible, from one’s employer.
Key points before you apply for a loan
- Keep the Credit score above than average level.
- Check loan eligibility amount, using online tools.
- Keep essential documents ready, like income tax returns, income proof, for last three years, identity proof, address proof, PAN card, Aadhaar card, etc.
- Keep down payment amount ready.
- Figure out the tenure of loan that suitable for you.
- Compare a list of banks, by most attractive interest rates, penalty fees, maximum loan to value ratio, low charges and least investment approval time.
- Compare a list of banks, by most attractive interest rates, penalty fees, maximum loan to value ratio, low charges and least investment approval time.
In most of the cases, the developer may also help, by proving guarantees, or by offering subvention schemes or by absorbing certain costs that can contribute to eligibility. Experts recommend that loan seekers should also check online portals that can tell you rates and eligibility for home loans, from your income.
