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Applying for a Home Loan? Tackle these 6 Problems

  • Highlights

  • Ensure that you have the required documents in place

  • Lenders give a loan up to 80% of the value of the home

  • Most applications are rejected due to low CIBIL score

  • Ensure that you have sufficient down payment

If you are opting for a Home Loan to finance your dream house, read on to find out some of the common Home Loan problems and how you can avoid them in future.

Application rejection

One of the main issues faced by applicants is the rejection of loan applications at the very outset. This can happen if you do not provide the right documents or if you don’t meet the lender’s income eligibility criteria.
Also, if your lender is unable to authenticate the details you have submitted, your application will most likely be rejected. So, make sure to have your documentation ready and in order.

Evaluation of the property by the lender

While property valuation may not look like that big a problem, it certainly is a problem that needs to be tackled smartly. This is because the purchase price of your intended home might be higher than the lender’s evaluation of that property. In such cases, you will have to pay the difference yourself. Hence, you need to be wary of resale properties and carefully choose your real estate investments.

Additional Read: Why Should You be Choosing a Home Loan Balance Transfer

Loan processing fee

Bear in mind that there is always a processing fee involved in every loan application you submit. This fee, ranging from 0.25% to 1%, and is not returned to you even if you don’t end up availing the loan. Loan processing fee can be charged only after your loan is sanctioned.

Insufficient down payment

While most lenders give you up to 80% of the cost of your home, you are required to deposit about 20% of the house cost as a down payment. You need to keep this amount ready since failure to make an adequate deposit may result in the lender rejecting your application. For instance, if the cost of a house you are willing to buy is INR 20 lakh, then you will need to deposit about INR 4 lakh with the bank.

Lack of guidance on interest rates

Another complication is choosing between the different types of home loan interest rates. Choose between fixed and floating rates  depending on a careful analysis of your payment plans. You can also opt for partly fixed and partly floating interest rates if you want a flexible option. Consider your repayment capability and make a carefully weighed decision so that the repayment schedule doesn’t overburden you.

Additional Read: When Should You Do Home Loan Balance Transfer

Loan amount not as requested

One of the major home loan complications that borrowers face is not having the desired loan amount sanctioned. This could happen due to several reasons, such as a poor credit history or balance on previous loans. The lender might also feel that your potential to repay the loan has reduced, based on your current income and assets.

Home Loan EMI Calculator

Your credit score plays a major role in determining your home loan eligibility. CIBIL score problems include having a score that is too low to encourage a lender’s confidence in you. These are just a few of the factors that ascertain your eligibility for a home loan. Be diligent enough not to make any of these mistakes and you’ll most likely walk away with a sanctioned home loan.

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The material contained in this site and on associated web pages is general information and it is not intended to be advice on any particular matter. Subscribers and users should seek professional advice before acting on the basis of the information contained herein. The decision with respect to any financial product or opportunity or nature or suitability or choice or the viability of any product or service shall always be sole responsibility and decision of the subscriber and user.

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