Home loan is a product which helps you to buy your dream home, but it also brings long-term responsibilities of repayment. The tenure of home loan repayment varies from 15 years to 30 years. As the period of repayment is very long, the lender checks the income flow and repayment capability of the home loan applicant.
Banks & NBFCs reject numerous applications because they don’t meet the eligibility criteria of home finance. Thus, an individual should do exceptional research while applying for a home loan, so that his/ her application doesn’t get rejected. If you are planning to opt for a home loan, these are some points you should keep in mind to avoid the rejection from lenders.
The CIBIL score of the borrower:
The creditworthiness of an individual depends on the credit score. The applicant’s credit score plays a major role in the approval and rejection of the home loan. Usually, lender considers 750 as a very good score. If the borrower has a credit score of more than 750, his or her chances of getting the home loan are higher.
The applicant should verify all the proofs and documents precisely before submitting the home loan application. If the lender finds any mistake or false information in application or documents, this will reduce the chances of your home loan approval. Here is the list of basic documents which needs to be submitted Proof of identity (Copy of Aadhar/Passport/Voter ID/PAN Card/).Proof of address (Copy of latest Electricity Bill/Telephone Bill/Property Tax Receipt/Voter ID/Passport). Last 12 months’ Pass Book/Bank Account Statement for all saving and current accounts. Identification of signatures from present bankers or a signature proof such as PAN card. The applicant needs to submit income proof and documents of the property.
Age of the applicant:
The age group between 35-50 are given more preference for a home loan. Because people within this segment are financially stable. As the tenure of the home loan is around 30 years, the lender wants the borrower age to be 60 to 70 during the maturity period. The one who doesn’t fit this criteria faces rejection from the borrower.
The income of the borrower plays a vital role in the approval of the home loan. On the basis of geographical basis, banks and NBFCs have set different income limit for the borrower. The income limit is high in metro cities and comparatively low in other regions. FOIR ( Fixed Obligations to Income Ratio) plays a vital role in loan amount eligibility of an individual. In simple words, the lender checks that the applicant current expenses on that basis it will approve the loan amount.
The lender has second thoughts to home finance a property which is not under the municipality limits of the region. Secondly, the lender requires complete approval of the property from local bodies. The lender also hesitates to finance an old property because it doesn’t have good resale value.
Stable career has become a major criteria for home loan approval. As the repayment of a home loan is a loan-term process, the lender checks whether the borrower has a stable career or not. Banks consider a self-employed applicant to remain in the current job for minimum 3 years.