Why home loan is the best housing finance in India?

Buying home is a big step in individual’s life. Also, with the zooming property rates, family responsibilities and other priorities towards mortgages it is difficult to buy home through our savings entirely. Usually, a home loan is one of the biggest liabilities. Considering the huge amount and the long tenure involved it is important you do sufficient research and talk to the financial expert before choosing your Home loan products. Lenders consider many factors before granting individual with loan. The criteria to determine the eligibility and quantum of a loan differ from one lender to another. Some parameters would be your good credit score, ensuring timely payment of credit card dues, closing all loans taken earlier and increasing level of income source.  However, there are some casual things due to which your loan might get rejected.

Here are few reasons for loan rejections which normally people many not be aware of:

Job Switch

Banks and finance companies need that you have job stability. They have made it mandatory that the applicant needs to be employed with a particular company from minimum 3 or more years to get eligible for a loan. Banks may also consider the company background, its growth and future stability. So, it is highly advisable that the applicant stick to a particular job for minimum period to get your loan sanctioned easily.

Default Residential address

Your existing place where you live is also important consideration while applying for Home loan.  If the applicant bears the same address as someone who has been a defaulter for either loan repayment or credit dues and has been reported to CIBIL rating, there is a chance for loan rejection. Banks often have database of negative PIN codes based on surveys and research.

Profile

Some banks dictate that some geographic are or credit profiles are negative for lending the loan and the bank won’t be able to sanction loans. In such cases, one needs to discuss it with the bank and provide other security in form of guarantor or insurance policies, investment paper, collateral securities, fixed deposits. etc. in order to assure the banker about their repayment ability.

Old Building

A bank will not fund old building if they are more than around 20-25 years old. The criteria of the age of the property vary from bank to another bank. But, the land value will always be considered by the bank. One can negotiate for a lesser loan amount by adding some form of security and one can also increase the down payment to get the loan sanctioned.

Credit History

It is extremely important that you have a good credit score rating to avail any form of loan. Before, lending out the loan, banks have a background check of your credit history through a Credit Information Company like CIBIL (Credit Information Bureau India Ltd.) and go through your repayment track record. You can always visit the government recognized site for www.cibil.com and get your credit report. The errors in your credit report can reduce your chances of getting a good Home loan offer. It is accessed by the bank’s credit department after you apply for the housing loan for inputs on your credit history. Based on your credit score and the above documents, the bank will ascertain your repayment capacity. In case you have ever defaulted on any bill payment, it will reduce your chances of getting a loan. After the bank is satisfied with the paperwork, it will offer you the loan, which will typically range from 40-70% of the value of the property.

Prior Rejection

Every bank has a record of the rejected Home loan applications in their database or can obtain a history of loan application enquiries from CIBIL. When the applicant applies to a bank, it will show up in the credit profile check about a fresh application or prior rejection, etc. and if rejected it would probably affect the credit worthiness of the applicant. It is highly advisable that one should not keep on applying for loans without any reason.