HOMEWORK FOR HOMELOANS!

With banks stumbling over each other to give us loans, dreams are no longer impossible. Whether it is to buy a house or to purchase a fancy car or it is simply a personal loan, man’s needs are unending!

…And when there is an option of getting low interest and easy to pay back loans, our needs keep getting bigger.

We all agree to getting regular calls from bankers who can’t wait to lend us credit cards! Executives are sent chasing behind us to consider a loan for something we might not necessarily need!

For those who are wondering why they aren’t being hammered by credit card lenders and banks, you just probably don’t meet the requirement or eligibility criteria.

Let’s take a look at what this eligibility criteria consists of…

    1.  The most important thing a lender is interested in knowing is whether or not you can repay what you have borrowed with interest. Banks normally tend to gauge one’s repayment capacity above anything else. It is noted that banks actually charge a lower interest rate for employers of a reputed company compared to someone working for a smaller firm.

    2.  How much do you earn? Is you EMI more than 60% of your monthly salary? Then your application is likely to be rejected!
Sometimes, for similar reasons, people tend to opt for joint loans with their spouses or off springs.

    3.  The nature of the loan also plays an important role in the approval of you application. Home loans are considered most important as during a financial crisis, people are more likely to repay home loans than other expenditures.

    4.  The age of the applicant is said to be another important deciding factor. The ideal age of an applicant should be between 30 – 50 years.

    5.  For those who are self employed, income tax returns and profit and loss statements of the past three years need to be in order. Although policies differ from bank to bank, this stands true in general.

    6.  One of the most important factors deciding eligibility is past repayment records / frauds or defaults. According to the RBI all banks and lenders are required to pass on information on every credit transaction to a credit information company such as the Credit Information Bureau India Ltd (Cibil) and Experian Credit Information Company to maintain the credit history of individuals and companies.

    7.  Rejected loans applications in the past. People are not aware but just like past visa rejections, past loan rejections have great chances of affecting future loan prospects.

    8.  For a home renovation loan, consider approaching the bank with which you have an existing home loan account. If you have been servicing your loan well, your lender will be more than willing to offer a top-up loan or an overdraft facility. An existing relationship with a bank always works in your favor.

In a nutshell,

 ü Be clear on property title

 ü Go for a reputed developer

 ü EMI should be less than 50% of gross salary/income

 ü Stable career/employment

 ü Margin should be 10-25% of loan

 ü Good credit record

 ü Identity proof

 ü Proof of address

 ü Get the ownership verified, if buying a pre-owned property

 ü Try approaching the bank where you have a salary account

[Source: Business Today]

…Now the next time you think of taking a loan, you know how to enhance your credit-worthiness.