WHILE on a house-hunting spree, prospective buyers do a great amount of homework before identifying their dream home - the location, property rates in the vicinity, carpet area, developer's reputation, proximity to the railway station/bus stop and so on. Once these aspects score high on the satisfaction front, a decision is made. However, very rarely do the buyers evaluate their own eligibility for getting a loan before finalising the house. Often, the loan sanction is taken for granted. As a result, they get a shock when their loan request is rejected. Therefore, it is best to objectively assess your repayment capacity and take into account other factors before applying for a loan. Here are a few reasons why your loan request could be turned down:
Inadequate Income: The bank or HFC may refuse a loan if your earnings fall short of the minimum desired income level prescribed by the lender. Irregular income streams, too, could play spoilsport. At your end, to eliminate this possibility, you can consider applying for the loan jointly with your spouse; the combined higher income could enhance your loan eligibility as well as tax benefits.
Unfavourable Credit Report: Your credit history plays an extremely important role in the loan sanction process. Such records of borrowers are maintained by credit information companies like Credit Information Bureau (CIBIL) and Experian. If, after obtaining you credit report, the bank/HFC finds your repayment track record to be less-than-satisfactory, loan approval could hit a dead-end. Therefore, it is advisable to get a copy of your report from credit information companies before initiating the loan-application process. In case you notice any errors – for instance, if any loan is classified as outstanding despite you having cleared the dues – you can approach the lending bank to resolve the issue.
Overleveraging: Your repayment capacity, as perceived by the prospective lender, depends not only on your income level, but also your existing debt composition. If you are already paying equated monthly instalments (EMIs) for other loans, the lender may not look upon your request with a friendly eye. Hence, it is best to repay all your loans before seeking a housing loan. Apart from brightening the chances of a loan sanction, this could also reduce your debt burden.
Documentation Hassles: Lending institutions, logically, place a lot of emphasis on property-related documents. It will be wise to ensure that documents including, no objection certificates (NOC), from the builder or the housing society (which may have withheld the NOC because of pending dues), title deeds, documents proving that the necessary approvals for property construction are in place etc. Prior to sending in your loan application, you should ask the lender for an indicative list of documents that will be required to complete the procedure.
