Applying for a Home Loan? Tackle these 6 Problems

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.

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.