Be Ready With These Before You Apply For A Home Loan
If you are looking for a home loan, you should be aware of the factors that can potentially hamper your chances of getting the home loan sanctioned. Wait. Having all your documents in place is not the only concern. There are many factors which can turn out to be dampeners.
Remember that before sanctioning loans, banks dig deep into an applicant's financial details and his social standing. Lenders read the applicant's financial capability and his past credit dealings. Their assessment includes the applicant's income and expenditure pattern, savings history, past and current financial liabilities, etc, besides stability and trustworthiness in other areas. For example, the application of an individual employed with the same company for a long period is likely to be processed faster than of an individual with a frequent job changes or that of a self-employed person.
Let's look at factors which are latent in nature but play a major role in a lender's decision making process towards applicant's home loan sanction:
1. Lack of job stability
Lenders want to be sure that you are a low-risk customer. Lack of job stability or frequent job changes imply that you are not consistent with your earnings and can be a potential defaulter.
2. Credit obligations
Having huge credit card dues and other loans will also have a significant impact on your home loan eligibility. Lenders determine your ability to take on additional EMI burden vis-à-vis your current net income. The bigger the burden, the lower the loan eligibility amount.
3. Frequent delays or defaults of credit card dues/ loan EMIs
Persistent delays or defaults can affect your credit rating. Defaulting on your credit card dues/loan repayments jeopardises your ability to get loans or credit cards in future. Even a bad credit history of a co-borrower can ruin your chances of getting a loan.
4. Cheque returns
A small charge debited by your bank in the statement indicates that your bank returned a cheque issued by you. Number of such cheque returns can have a negative impact on your loan sanction.
5. Number of new enquiries
Whenever you apply for a credit card or a loan, the card issuer/lender pulls your credit history from the CIBIL, which gets registered as an enquiry in your credit report. Excessive numbers of such enquiries indicate that you are “Credit Hungry” and in an urgent need of money. This makes the providers more cautious while evaluating your application.
6. Residential address on defaulter's list
If you are living in the same house as someone who was a loan defaulter, chances of your loan application getting rejected are high. The defaulter could be a relative, family member or a previous occupant. You will have tough time convincing the lender that the occupant is not related to you and in case of family member/relative, they are not dependent on you.
7. Staying guarantor for friends/relatives
Always remember that you cannot withdraw your guarantee mid-way. In case your friends/relatives defaults in repaying the loan, it will severely hurt your credit history. This means that if you need any loan or a credit card in future, your chances of getting the same could be jeopardised due to default of your friend/relative. The impact of standing a guarantor for a loan is the same as taking a loan your self.
8. Withholding facts in application
It is not advisable not to withhold facts from your prospective lender. It is advisable that you declare the information to avoid the application being rejected.
9. Insufficient documents
Never apply for a loan without proper financial documentation for the lender, as it can delay your loan process or even cause the lender to reject the application.
10. Unsuitable profile
Every lender has its own set of guidelines/internal policies for sanctioning of loan. If your application falls under certain professions or income criteria or geographical area that is listed in their policy guidelines as not suitable for lending, chances of getting a loan are slim.
Nikolai Kirtikar, Product Manager, Apnapaisa.com