ATM :: Got your first job? Should you buy a home now?


If you are contemplating to buy a home after getting an appointment letter in hand, here is some help for you.
Sukanya Kumar – Founder & Director, RetailLending.com | Source: Moneycontrol.com

ATM

Getting the first appointment letter is a blissful feeling. With the letter in hand one’s aspiration in life changes altogether. With the income-assurance, comes an expenditure-planning and if home is topping your chart, then you might like to read on to know the matter in deep.

If you wish to buy the first home with a home loan, then you must know that every credit facility in India has a policy-maker’s thought-process behind it, and amongst all asset-lendings, mortgage is the toughest borrowing for a person. Not because it’s a difficult process to acquire it, but for a lesser-known reason. It might be news to many that unless you have a three-year work experience, almost all lenders do not encourage housing loan for an individual.

Reasons as follows:

1.The tenure: Unlike a credit card, personal loan or a car loan, home loan is a long-term lending. A credit card gets renewed each year, personal loan can be for maximum five years and a car loan for seven years. But a home loan for a first time buyer-cum-borrower who is in his 20-s, is minimum of 20 years and to a max of 30 years. Commitment for this long a period calls for a background of work-experience coupled with industry references.

2.The rate of interest: Home loan is the cheapest credit facility in the market. Obviously the credit policy around it will be tougher than other “high risk-high gain” products like credit card and unsecured lending, where a higher default rate is largely covered with high interest-rate borrowings.

3.The job-stability: Without a confirmed and stable job, no lender would want to extend a credit for a 20-30 year term and it is completely understandable. Many, after joining a job too, leaves it in-between to pursue higher studies etc. which makes the credit appraisers wary about lending right at the beginning of the career of an individual.

4.No credit score: Having a history of credit worthiness is important for a housing loan borrower. That gets developed in the first 2-3 years when a person takes a few credit cards, takes personal loan for small expenses and buys a car on credit. By the time they think of a home loan, their credit history is already written which makes an appraiser confident of lending.

5.The Loan amount: In case of a home loan, the amount lent, is not in thousands. It is in lakhs of rupees and may even go to crore plus in major cities. Naturally the risk involved in lending against a home requires higher scrutiny. Hence, the caution.

However, do not lose heart. There are ways to get an early credit for home loan under few circumstances:
(a) Having a professional degree which may indicate that the person is capable of practicing his professional degree if becomes unemployed.
(b) Having an earning parent as co-applicant in the loan where his income stability helps.

Both the above conditions are a credit appraiser’s call and he/she need to be convinced about the stability beyond the risk they perceive.

Source : http://goo.gl/3lqAPG

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