Applying For A Home Loan: Target Clientele v/s Caution Profile

Applying For A Home Loan: Target Clientele v/s Caution Profile

Applying For A Home Loan: Target Clientele v/s Caution Profile
India Mortgage Guarantee Corporation is urging the Reserve Bank of India (RBI) to bring down the loan-to-value ratio to 90 per cent. (PicServer)

Buying a home and applying for a home loan are usually well thought out decisions. Prudent homebuyers plan to acquire property based on the home loan pre-approved to them.

Getting a home loan is, however, a cumbersome and time-consuming process. There is enough information on how applicants can raise their home loan eligibility, and how they can avoid their home loan application being rejected.

Home loan applicants, however, are unaware that many home loan/mortgage applicants fall under the category “Caution Profile”. Lenders consider certain job profiles risky or less eligible/unsuitable for home loans.

Securing a job is not enough to get a home loan. Your job profile matters as much.

MakaanIQ lists various borrower categories and the checklist on caution profile in some detail.

What are the various borrower categories?

Let us first understand how lenders categorise you based on your work profile. It is important to understand how worker profiles are categorised so that the 'caution profiles' that fall under different types of jobs of prospective home loan applicants can be identified. The various borrowers' categories are:

  • Salaried
  • Self-Employed Professional
  • Self-Employed Non-Professional
  • Non-Resident Indian/Person of Indian Origin
  • Excluded class of people not eligible for home loans: Hindu Undivided Family, Trusts, Clubs or any other such bodies, Association of Persons, Minors

Caution profiles among 'Salaried' class of home loan buyers

All salaried individuals are eligible for home loans, except those who are in:

  • Temporary jobs
  • Daily wage jobs
  • Contractual jobs (Except people who work in multi-national companies and professionals qualified to work in consultancy firms)
  • Salaried applicants who work for “Private Limited” and “Dot Com” companies (Extra caution is exercised in these cases)

Caution Profiles among salaried applicants are further categorised based on the entities/companies they work with.

  • Salaried employees of defaulting/Board for Industrial and Financial Reconstruction (BIFR) companies
  • Salaried employees of small private limited companies (with turnover of less than Rs 1 crore, with less than 50 employees and have been in the business for less than three years)
  • Salaried employees of partnership and proprietary firms

Caution profiles among 'Self Employed Professionals'

The self-employed professionals are classified as qualified and unqualified home loan borrowers, based on their qualifications.

Professionally qualified home loan buyers

  • Doctors
  • Dentists
  • Engineers
  • Architects
  • CA/ICWAI/CS(Chartered Accountants/Cost Accountants/Company Secretaries)
  • MBAs (from recognised universities)

Professionally unqualified home loan buyers

  • Computer professionals
  • Ayurveda professionals
  • Unani (A system of medicine practiced in some parts of Asia)
  • Veterinary
  • Diploma/Certificate course holders

Target clientele among 'Self-Employed Non-Professionals'

  • Proprietors
  • Partnership firms
  • Closely held Private/ Public Limited companies

Target clientele among 'Non-Resident Indians'

Most banks and financial institutions in India give home loans only to salaried and self-employed professionals working abroad (exceptions may be there).

How are applications of home loan aspirants who fall under 'caution profile' category appraised by lenders?

Before we analyse the home loan appraisal process, home loan applications that fall under 'caution profile' category, keep in mind that no bank wants to lose you as a customer. Every bank has a negative list based on the residential address of home loan applicants, the area in which they wish to buy property, and their job or organisation profile.

If you fall under the 'caution profile' category, the lender will exercise extra caution while assessing your home loan application. They will not reject your home loan application right away. They will study your application in detail, and see if they can extend a loan to you if you fulfill other criteria well.

Every bank has a delegation of power (DOP) at a certain level of designation, for a specific amount, to deviate from the stipulated norms of the bank. This, however, happens only when the application is satisfactory and lending to you seems safe after other parameters are taken into account.  Do not expect the lender to be lenient even if you do not fit the criteria in many possible ways.

The banker will take the call only if your case looks genuine.

Last Updated: Wed Aug 10 2016

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