Buying a home is one of the happiest moments in an individual’s life. However, due to zooming property prices and prior financial commitments, it’s nearly impossible to fund your home with your own savings. Thus, a home loan is your best financial bet to fund your housing needs. Top banks and finance companies provide a loan with attractive home loan interest rates and flexible tenure. Since there is a huge cost involved and the tenure time is for 20-25 years, you should do sufficient research and talk to the financial expert before choosing home loan products. Home loan lenders consider many factors before they sanction the loan. The eligibility criteria and quantum of loan differ from one loan lender to another. Some common parameters include credit score, stable job or business, good income source, low debt-to-income ratio, age, property value & its documentation. If you don’t have enough knowledge on the subject, your loan might tend to get rejected.
So, a few things that can reject your home loan:
Banks and finance companies will see your job stability. If the applicant is working in the same profession or organization for 2-3 years it proves there is a stable source of income. Lenders will also check your company background and its growth. It is advisable if you’re planning to apply for loans don’t switch your job.
Sometimes banks or financial institute would tend to reject the loan in a geographically restricted region or people with negative credit profile. In such a scenario, one has to discuss with the bank and financial company and provide security in the form of guarantor, investment or insurance policies, fixed deposits, etc. It will assure lenders about your repayment capability. You might find some financial institution that will approve the loan with slightly higher home loan interest rates.
Your current residential address
Many are not aware that their existing place where they live is also important at the time of home loan application. If the home loan applicant bears an address which has been in the defaulter list of the prior loan lender, CIBIL rating, it might tend to reject your application. Home loan providers have a set of a database of negative PIN codes, geographical location, riot-prone areas, based on surveys and research.
Your lender won’t sanction loan if the property is more than 20-25 years old. The criteria for this would vary from one loan lender to another. Also, the land value is considered by the lenders. One can negotiate with the lenders for certain loan amount, provided you’re willing to shell out more in the down payment.
It plays an important role to negotiate with the lenders for low home loan interest rates and higher limits. Your CIBIL score depicts your creditworthiness and repayment history. If you clear all your prior loans and have a good credit score of around 750 and above it puts in a better position to negotiate with the lenders.
You can visit the CIBIL site to check your credit score.
Once the banks or financial institutes have evaluated your papers, they will sanction the loan amount that would range between 80% to 85% of the property value.