Buying a home is more than just than choosing the right property as this involves in getting into the biggest financial commitment in your life. It is imperative that the fund for the purchase of your dream home is arranged with the least impact on your future financial commitments.
To have your home loan approved, keep a track of the listed points:
- A good CIBIL/credit score
- A stable job/business
- Complete documentation
- An approved property
- No Dues Certificate from previous lenders
Home loans usually extend to twenty years and above into the future, which is why lenders follow a structured and a disciplined approval method to process a loan. Stringent methods are adhered to ensure that a repayment capacity is sufficiently maintained by you to avail a long tenure loan as such, in the process of which, there are chances that your application might be rejected. But this is no reason to get dejected. Take this as an opportunity to understand the reasons, observe measures to correct your records and straighten it to avail any loan next time without any hurdles.
Possibilities why your loan was declined:
- Poor CIBIL / Credit Score:
Your CIBIL/Credit score is a method of assessing your financial thirst, credit worthiness and strength. Lenders are skeptical over low scores as it is merely a depiction of bad financial history and is one of the major reasons for rejection.
- Mistakes / false entries in report
Let’s say that your report shows that you have applied for credit cards simultaneously, whereas in reality you have never applied. There could also be an entry which shows that about a personal loan availed and closed and you can be unaware of the same. Even though the status reflects that it has been closed it is still your responsibility to have them clarified and removed if they do not belong to you. Every single entry in your report has an impact on your score.
- Staying cautious as a guarantor too!
It doesn’t matter if you have paid your dues on time and have maintained a healthy financial report, if, the people for whom you have signed as a guarantor for, have failed to make payments on time. This too, will take a big toll on your score.
- Frequent job shifts
While you would always try to justify those frequent jumps with reasons like designations and huge hikes, lenders would still prefer other people who have had a stable duration of tenure with an organization.
- Employer’s Profile:
Sometimes you may wonder over your loan being declined even with a healthy report and financial strength, as lenders also strongly consider over the profile and stability of the employer whom you work for. It does really matter on the perspective of repayment over the long run.
- Incomplete documents:
The home loan you apply for is purely processed on the basis of the documents you have provided and solely depends on the level of information the lender is able to retrieve and analyze from it. So, it is your duty to provide them with the complete information to avoid any pending queries which may arise from it.
- Choosing the property:
It is also equally important that you choose the right property. Lenders evaluate properties based on the guide lines, age and not on the market values alone, and this may not exactly meet the desired loan amounts as you have in mind.
- Debt levels:
Lenders also look into the current financial obligations even if your credit worthiness is good with a high a credit score. If incase of multiple loans already in place, accommodating an additional home loan will only make the lender feel uncertain about the repayment capacity, thereby declining approval towards your loan.
- Age factor:
Age is a discerning factor when it comes to availing a home loan, as they come with a long tenure of repayment. It might be difficult if you are fast approaching retirement, wherein, the only way to ascertain the lender is by proving adequate income levels to repay before retirement.
- “NO DUES CERTIFICATE” from previous lenders:
The N O C, as it is otherwise known as, plays an important role when it comes to purchase of resale properties. If the seller has already availed a home loan through which he has provided funds for buying this asset, then it is very detrimental that this document be provided for you to avail a home loan.
Points to help you avail a home loan:
Here are a few points that will help you maintain a healthy credit score and improve the probability of getting a home loan:
- Focus and improve your credit score:
This can be easily achieved by you if you adhere to a strict discipline of on time payments.
- Periodical check on your credit report:
Maintain a check on your credit report twice or once in a year. Do not apply or let others apply on your behalf for financial products randomly or repetitively, unless you have really decided on availing it.
- Be a watchful guarantor:
To help someone you know to avail a loan by assuring the lender as a guarantor is fine, but, also do remember to periodically check on the repayments.
- Check on documentation:
Complete documentation is a meticulous process which you have to follow to ascertain that the lender has all the information he requires about you to grant you a loan.
- Don’t shift too often:
Create a stable career with longer duration of tenure served. This will create a stable profile of yours amidst lenders.
- Litigation free property:
Do a whole lot of ground work on the property you have chosen to invest your life’s earnings. Should there be the slightest legal issues or documents not in place, consider other options, rather than trying to sort it out with your lenders. Lenders opt only for properties which would be hassle free.
- Look for options:
Always look for options even with lenders. Some might not consider, a few may charge you high rates of interest, while there may still be some who would be able to offer you at lower rates and lesser processing charges.
To summarize, availing a home loan solely depends on your financial history which you have created for yourself, along with your age and the property you have chosen. The above points sure would act as basic thumb rules over the long run to help you get a loan for buying your dream home.