The goal of this post is to make your home loan experience as painless as possible.
1 Rejection at the first stage
Many home loan applicants fail even the first test, which is strange but real.They are outright refused since the borrower's qualifications do not match the lender's requirements.It could be due to age restrictions, income restrictions, the failure to present suitable documentation, the bank's inability to properly verify your information, or the failure to pass the bank's field investigations, among other things.
The easiest method to avoid this type of rejection is to thoroughly review the eligibility conditions of lending banks and apply only to those that match your profile.
You will breeze through the preliminary verification procedure if you have all of the necessary documentation on hand and provide the banks with correct, verifiable information.
2. Processing fee not refunded
Banks require processing fees of 0.25 percent to 1% of the loan amount to be remitted with each application form for home loans.In most cases, the processing fees are non-refundable.
Simply put, if the bank determines that you do not deserve the house loan for whatever reason, the fees will not be refunded.This is the fee when applying for a mortgage.If the bank you've applied to says it would reimburse your processing fees if the bank doesn't approve your house loan, it's a good idea to acquire that statement in writing and double-check that the clause is enforceable.
A bank official's verbal statement is useless unless it is properly and legally documented.In all other circumstances, there is minimal recourse for non-refunding processing expenses.
3. Desired loan not sanctioned
The loan amount granted is mostly determined by the borrower's ability to repay the loan.When a bank determines how much of a home loan a client can get, many factors are considered.Monthly income, financial history, other unpaid debts with the borrower, past repayment record, credit card usage history if any, bounced checks, average bank balance, continuity in current employment, total years in employment, nature of employment, and so on are all factors to consider.
These variables are used to assist the bank in determining whether or not it will be able to recover its funds satisfactorily.If you are turned down owing to any of these factors, you can raise your eligibility by pooling your income with your spouse's, father's, son's, or relative's and adding them as a co-borrower.
Furthermore, if you have adequate cash in NSCs, provident funds, LIC policies, and other similar investments, you can use them as collateral and ask the bank to finance your home loan.
4. The interest rate dilemma
Choosing between a fixed rate or a floating rate interest rate for a home loan is a decision that practically every home loan borrower must make.Even after you've decided on a loan programme, the fine print in the home loan terms and conditions can wreak havoc on your interest rates.
Even if a borrower chooses a fixed rate house loan and the bank promises him a rate that he considers acceptable, the tiny print allows the bank to change the fixed rate every two years, making matters worse for the fixed rate borrower.
Similarly, in a floating interest rate environment, if the bank does not pass on the benefit of lower interest rates to you, it will be of little use.To avoid a situation like this, thoroughly read the terms and conditions of your house loan and ask the bank questions about them.
When it comes to floating interest rates, the facts can be verified by looking at how house loan interest rates declined during low interest times.Request a list of historical floating rate adjustments from your bank.
5. Difference in property valuation
For the legal, technical, and financial appraisal of the property in question, the bank has its own experts.It assesses the characteristic based on its own set of criteria and assigns a value to it.This value could be much lower than the property's asking price.As a result, the bank will only lend you up to the value of your property.This may result in a big difference between what you require and what the bank is ready to lend.To avoid this problem, the borrower might have the property assessed by a bank-approved valuator before applying for a home loan.
6. The down payment
Banks typically demand borrowers to put down 10% to 20% (depending on the bank) of the total loan amount as a down payment on a house loan.This sum must be deposited prior to the house loan being disbursed.In the absence of such a down payment, the bank will deny the borrower a home loan.This could range from Rs 1 to Rs 2 lakh for a property loan of Rs 10 lakh.The borrower must have this amount readily available.
In the event that the bank's assessment of the property is significantly lower than the market price, the borrower will be responsible for the remaining sum.As a result, the down payment is essentially increased.The apparent solution to this difficult scenario is to have the property assessed and the down payment ready ahead of time.
NSCs, provident funds, LIC insurance, and other forms of down payment are accepted by some banks.Checking the down payment requirements of numerous banks and choosing the one that requires the least amount of money to be put initially or fits your budget well is normally a good procedure.
7. Title deeds and NOC documentation problems
The title deeds and letters of credit must be submitted in the bank's format.Borrowers who fail to present such documentation in a timely manner may jeopardise the entire process and will be denied a house loan.To prevent ending up in such a tense scenario, find out what documents banks require ahead of time and take the necessary steps to have them ready within the time range.
Conclusion
The issues discussed here are prevalent, but they can be readily avoided if the borrower follows appropriate procedure, prepares adequately before applying, and maintains proper documentation. If any issue then contacts me (+91-9477079053) at Home Loan apply online.
