Why Getting a Home Loan is Difficult
Everyone dreams of having own house. But increasing real estate prices has made buying a home for a middle class family very difficult and is an impossible task for a poor person. But with home loan approval becoming easier, buying a house is become very easy.
We keep on getting phone calls from bank for purchasing fixed deposit, personal or home loan, credit card and many other new products. Many a times we’re told that your home loan and personal loan is already pre-approved because of which you don’t have to do any paper work. Normal person thinks that getting a home or personal loan is hassle free but when the person approaches bank, the home loan application gets rejected. So here are the seven reasons why getting a home loan is difficult.
Person’s profile is the most important factor which consists of education, profession, savings, insurance policy amongst many other things. If number of dependants on loan buyers are more and the person has already taken higher amount loan then banks become defensive in allocating the loan assuming that repayment of loan would be difficult for the person since he already has other financial obligations.
Title Deed and NOC Documents:
As specified by banks; title deed (a document specifying the ownership of the property which mentions specific rights to the person holding it) and NOC documents should be presented in a clear way with no misrepresentation. Person who applies for the loan and fails to show this then chances of loan disapproval increases
Loan Repayment (Credit History):
These days loan applicants history of previous loan repayment is very important when applying for a new loan and banks give special attention on this. Your credit history is the most important factor during loan application and if found poor; either because of credit card payment or personal loan repayment then chances of loan denial increases. These days banks and financial institutions in co-ordination of CIBIL pay special attention on each application.
If person’s age is higher or is approaching retirement or is retired then chances of getting a loan become less or loan term is reduced. But this reduction in loan term results in higher EMI’s from the bank offering loan which in turn affects repayment. Also read dealing with loan issues in India
Area Black Listed:
Applications are straight away rejected or the approval procedure becomes cumbersome if the housing area is black listed by the banks. Almost all the banks have list of blacklisted areas these days.
Home loan amount depends on your annual income. Before approval, banks calculate where the person would be able to pay the EMI based on the income. Permanent salaried or individuals who do not switch job too often get loans with minimal efforts. In addition to this, if the person has sufficient money in the bank account then also the approval chances are higher. On the other hand frequent job hoppers or person with too many dependants find it difficult in getting a home loan.
History of Loan Denial:
In India CIBIL maintains database of all the individuals who apply for home loan. So if you have applied for a loan earlier and faced rejection then CIBIL has records for this as well.