If you are opting for a home loan to finance your dream house, read on to find out some of the common problems you might face and how you can avoid them in the future.
Rejection of application
One of the main issues is the rejection of loan applications at the very outset because you have not submitted the right documents or you don’t meet the lender’s income eligibility criteria.
Also, if your lender cannot authenticate the details you have submitted, your application will most likely be rejected. So, ensure you have your documentation ready and in order.
Lender’s valuation of the property
Property valuation is something that needs to be tackled smartly. This is because the purchase price of your prospective home might be higher than the lender’s evaluation of it. In such cases, you will have to pay the difference yourself. Hence, you should be wary of resale properties and choose your real estate investments carefully.
Additional Read: Why should you be choosing a home loan balance transfer
Loan processing fee
There is always a processing fee involved in every loan application you submit. This fee ranges from 0.25% to 1% and is not refunded if you don’t get the loan. The loan processing fee can be charged only after your loan is sanctioned, so remember to account for it.
Insufficient down payment
Most lenders will give you up to 80% of the cost of your home as a loan, but you will have to deposit about 20% of the price of the house as a down payment. You need to keep this amount ready because the lender could reject your application if you fail to deposit an adequate sum. For instance, if the house you are willing to buy costs Rs. 20 lakh, you will need to deposit Rs. 4 lakh with the bank.
Lack of guidance on interest rates
Another challenge is choosing between different home loan interest rates. Opt for fixed or floating interest rates after carefully analysing your payment plans. You can also select a combination of fixed and 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 burden you.
Additional Read: When should you opt for a home loan balance transfer?
Loan amount not as requested
One of the major complications that borrowers face is not having the desired home loan amount sanctioned. This could happen due to poor credit history or unpaid 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. If you have a low CIBIL score, the lender will not have enough confidence in you. These are a few of the factors that ascertain your eligibility for a home loan. Try and secure yourself on these fronts, and you’ll most likely walk away with a sanctioned home loan amount of your choice.
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