How to Get Your Home Loan Approved
Home Loans can be availed at attractive rates from banks and other financial institutions. It is, however, important for you to analyze your credit worthiness when you plan to apply for a home loan. The application for home loan that you plan to submit in any bank would be viewed on number of parameters out of which the most important one is your credit worthiness. Statistics prove that the rejection rate on home loans has now jumped to 30 percent. There are some who easily sail through the home loan process and many struggle their way out due to few mistakes that they make in the initial screening period.
Banks take due care prior to lending money to you for a home loan by analyzing your credit history in order to get a clear picture about whether you will be able to repay the amount borrowed with interest within the stipulated time frame or not. You CIBIL Score also plays an important role in deciding the fate of your loan application.
It is also advisable that while you plan for your dream home you may also work towards getting a pre-approval for your home loan. This would save in a lot of your precious time and the pre-approval letter that would be issued to you would clearly state that your loan application would be approved when you make a purchase offer towards a home after you submit the specified documents.
Following steps would assist you in getting your home loan approved.
Tips on How to Get Your Home Loan Approved
Bank Statement – Your bank statement is quite an important document while you apply for a home loan. It will give a clear view about your income and expenses thus helping the bank in assisting your credit worthiness that is whether you will be able to repay with interest what you have borrowed. It is important for you to provide the banker or relationship manager with the most recent bank statement of the account that is most active. Highlight all the non-recurring expenses reflected in your bank statement to your banker. Make sure you do not have any history of bounced cheques or skipped EMIs.
Elaborate your Non-Liquid Assets – Banks would be more than willing to give you loan if they are assured that you will be able to repay the money. While you discuss your sources of income with your banker you may also mention your spouse’s salary (if any), or any immovable asset in your name, your parents earnings (in case they are still in service or business), your social standing etc.
Building Long-Term Relation with the Bank – In the era of fierce competition and survival of the fittest, banks give extra weightage to consumers who are willing to create a long term relationship with them. So while you sit discussing about the home loan that you wish to opt also mention that you will be willing to open kids account with the bank or you would wish to open a locker with them. You may also mention about investing in fixed deposits, mutual funds or insurance policies. This would not just ensure them that they can cross sell products to you in future but would also provide them with your assets as security in case if you default in your repayment.
Your Credit History – If you do not have any ongoing loan or credit card outstanding in your name you should always highlight that. If you have any previous status of repayment of loan then you may also produce that as evidence of your credit worthiness and to press on the fact that you have not been a defaulter. This would also be reflected in you CIBIL Report making the bank dual sure. You may also produce the CIBIL Report of your parents or spouse for the purpose.
Guarantor – If you have arranged for a guarantor for yourself that would work in your favor. The guarantor has an important role to play in your loan application. If the guarantor that you have chosen also has a long term relationship with the bank you are applying would serve to be icing on the cake. If you highlight the credit worthiness, income, credit history etc of the guarantor as well that would surely work in your favor. However, in a number of banks the clause of mentioning a guarantor is not compulsory and comes in to play only when your stand alone creditability is somehow weak or you have high liabilities in your name.
Income Stability or Employment Background– It is important for you to explain to your banker that the income that you are earning is a stable one be it from your business or service. You need to highlight your professional stability and the accolades, increments or bonuses that you might have received recently or are accrued to you. If you are the one who has had frequent job changes then that may affect your chances of getting the loan approved. For example – HDFC Bank Ltd home loan approval process has a clause that you need to be with one company for a minimum of one and a half years before you apply for the loan. Mostly banks and financial institutions give an edge to the applicants who have had a minimum 2 years of continued employment with the same employer.
Existing Commitments – It is also important for you to analyze your existing repayment commitments (if any) prior to applying for your home loan. Banks and other finance companies usually do not prefer giving loan to you if your monthly liability is already more then 42 percent of your net monthly income. If you wish to qualify the loan application it is important for you to plan and reduce your monthly repayments in order to improve your chances of being accepted.
All you need to do is to step in the shoes of the lender. In order to avail a green signal for your home loan it is important for you to have a clear view about the criterions laid by the lender and how you are able to effectively and efficiently meet them.
The lender would surely want to receive the money back with interest and within the stipulated time. Therefore, you need to produce evidences in order to convince him that you are a safe bet for him. It is important for you to share all vital information pertaining to your income and credit history with the bank.
It is unethical to hide information and also makes your case difficult if the bank comes to know about the information that has been purposely hidden. After all it is the matter of your dream home and you would surely not want to miss on to that!