Everyone dreams to have their ‘own’ home one day. But with exorbitant property prices, buying a home for a middle-class family becomes very difficult and an impossible task for a poor person. So, one needs to find out “Why is it Hard to Get a Home Loan?” so as to prepare themselves in advance to become ready will all the requisites when applying for home loan.
There are various factors involved which make the process of availing home loan difficult. Let us discuss those factors :
Person’s profile is the most crucial factor which comprises of education, profession, savings, insurance policy amongst other things. If there are the maximum number of dependents on loan buyers and the person has already availed higher amount of loan, then the banks become defensive in the disbursement of loan assuming that repayment of the loan would become tedious for the person since he/she already has other financial commitments.
Title Deed and NOC Documents:
As stipulated by banks, title deed (a document stating the ownership of the property which describes specific rights to the person taking possession of it) and NOC documents should be produced in a clear manner without any misrepresentation. A person applying for the loan and failing to produce it thus, increases the chances of home loan disapproval.
Credit History or Loan Repayment:
Now -a-days the loan seekers history of past loan repayment is very crucial when applying for a new loan and banks pay special attention to this. Your credit history is the essential factor during loan application and if it’s poor; either due to credit card payment or personal loan repayment then chances for refusing the loan gets increased. These days banks and financial institutions in the coordination of CIBIL give special care and attention on each application.
If a person is of higher age or is reaching close to retirement or is retired then chances of obtaining a loan becomes less or loan term is reduced. But the reduction in loan term results in higher EMIs from the banks providing loan which ultimately impacts the repayment.
Applications are directly rejected or the approval procedure becomes unwieldy if the banks do blacklisting of the housing area. Now-a-days, almost every bank has a list of blacklisted areas.
The amount of home loan is based on your annual income. Before approval, banks check the affordability of an applicant whether he/she could be able to pay the EMI based on the income. Individuals such as permanent salaried or individuals who are not regular job hoppers too often secure loans with minimal efforts. Moreover, if the person has adequate money in the bank account then also the chances for approval stands to be higher. On the other hand, frequent job hoppers or person with too many dependents find it complex in availing a home loan.
History of Loan Denial:
In India, CIBIL maintains a database of all applicant seekers applying for home loan. If you have previously applied for a home loan and experienced failure then CIBIL also record this as well.
After witnessing above factors which can harm your reputation in availing home loans. Let’s discuss those factors which can actually improve your credit score in order to make you cordially avail the home loan so far.
- An Individual should pay all the outstanding dues and EMIs (of other loans) that went delinquent, including penalties if existed.
- An individual should focus towards paying EMIs regularly by the due date. In this way, your monthly liabilities can be minimized so as to improve your chances of getting your home loan application approved.
- An individual need to review his/her credit history frequently to check the updated status of payment on his/her report.
- Try to stay in your present job for atleast two years for successfully showing the evidence of a steady flow of income. Otherwise, you need to highlight your professional stability and the accolades, increments or bonuses that you might have received recently or are accrued to you in order to justify the steadiness in your income.
- Focus on buying that property or land for constructing property which is authorized by Government of India.
- Once you have finalized the deal with your builder, try to gain possession as soon as possible because it may invite greater chances for your home loan approval.
- If you are a self-employed individual having an unsteady income, try to show atleast more than one guarantor who has a stable profession with a sound income. The guarantor can be your closed family members, relatives or friend. You need to highlight the credit worthiness, income, credit history etc of the guarantor as well that would surely work in your favor.
- Plan for your dream home if you are a young, in such a manner you can avail the home loan successfully in giving necessary proof of your guarantors with regular income.