By ET Bureau | 11 May, 2015, 08.00AM IST | Economic Times
Your credit history and income are not the only factors lenders consider before giving you a home loan.
Here are five spoilers for home loan applicants…
1. Your age and income
Lenders look beyond your salary. “Home loan eligibility is calculated on the basis of the income of the applicant and the number of working years left,” says Rishi Mehra, Founder, deal4loans.com. A 50-year-old earning Rs 1.5 lakh a month could be eligible for a home loan of Rs 60 lakh, but a 30-yearold earning the same amount is eligible for a loan of Rs 94 lakh. The latter has 20 more years to repay the loan. As a housing loan is a 20-25 year-long contract, lenders need to be sure of your repayment capability. Lenders prefer applicants employed with a particular firm for at least a year. Says Sukanya Kumar of RetailLending.com: “Banks can be sceptical about giving loans to first-time entrepreneurs. Those working for firms with less than 50 employees also face difficulty.” Your profession could play spoilsport. Some banks do not lend to media professionals, lawyers and policemen.
2. Too many enquiries
Making too many enquiries for a home loan could mar your chances of securing one. You asking around for the best rates could be misinterpreted by propsective lenders. It would seem like nobody is ready to lend to you. This lowers your credit score, even if you have not availed of any loan. Every time you enquire about a loan with a bank, the bank checks your credit score with a credit bureau. This is considered to be an enquiry and you are termed “credit-hungry”, even if you were only shopping around for the best deal. Remember, each enquiry pulls down your credit score by 5-10 points. So go easy on those calls.
3. No credit history
Do not live under the illusion that having taken no credit till date gives you an upper hand. It does not. On the contrary, not having a loan history means there is no way the lender can evaluate your creditworthiness. Not servicing any credit at the time of applying for a loan could also lead to a loan rejection. So it might be a good idea to use your credit card once in a while for small spends. Not getting a No Objection Certificate on a previously closed loan and late payments for credit card dues, previous loans or an unpaid telephone bill can all go against you when the lender is evaluating your loan application.
4. Property background
Many banks lend only to select builders. Blacklisted projects/developers could be a reason for your loan application being rejected. Banks sometimes lend for only those developers they have a tie-up with. Avoid buying very old properties as lenders are rarely too keen on them. Even if they do lend, you will get only a part of the purchase price as there is a likelihood of a structural collapse in future. Most banks employ professionals to evaluate a property. The approval as well as amount depends on their evaluation. This includes but is not limited to absence of litigation, real estate price trends in the particular location, project progress, builder reputation and so on, says Adhil Shetty of BankBazaar. com. Unclear titles result in rejection of loans.
5. Family background
Surprising as it may sound, if you are a woman, your marital status could pose a problem. Despite many lenders offering women-specific housing loan products, banks can be reluctant to lend to a single working woman, as they fear the woman might stop working postmarriage and put the repayment in jeopardy. If you are a tenant of a loan defaulter or have one as your tenant/family member, you will find it difficult to secure a loan. Also, do not apply for a loan jointly with your sibling, it will be rejected.
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