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Some Mandatory Things to Check Before Approval of Home Loan

Written by  //  2017/06/09  //  Home Financing  //  No comments

Loan is basically debt given by an organization or an individual to another entity at a specific interest rate. Here usually the borrower receives a specific sum of money from the lender which he repays in installments along with the interest. One of the most essential things to pay heed to before you decide to buy a new house is the home loans.

5 essential things for approval of the loan

The several things that you have to look into before the loan gets approved are explained below.

  • The banks and other lending organizations prefer people with clear financial history. They initially calculate the credit score of the customers. It gives a clear picture of whether the individual has paid his past EMIs on time. Usually a score of 800 is considered the best, while if the score is below 300 it is likely that the loan application would get rejected.

    The shorter the repayment time the more likely that the loan would get approved in minimum possible time. The organizations mostly prefer individuals who agree to pay back the entire amount along with the interest within five years. The maximum time period that the organizations offer is 15-20 years but here the sanctioning of the loan becomes a difficult job.

  • The relationship of the individual with the bank is also an important aspect the lender looks into. The longer the relationship the more easy would be the job of getting approval. An individual who has been the account holder in the bank for more than 10 years would most likely get the loan easily.
  • The occupation of the borrower also plays an essential role in this matter. The banks prefer applicants with government and PSU jobs the most, since their job is considered the most stable. Next the doctors followed by engineers, lawyers and chartered accountants are considered. Individuals associated with private companies or self-employed are considered lowest in the ladder.

    This is one of the essential factors since the repayment capacity of the individuals is completely dependent on their income.
    For example if an individual is associated with a company where the employees do not get proper salary or if he switches job too frequently the loan application becomes weakened.

    The loan gets sanctioned easily if they are applied as joint loan. It occurs in cases where the income of the partner is also considered. Sometimes the interest rate is a little low if the loan is taken in the name of the spouse. However, in these cases both of their income would be taken into account while calculating the repayment capacity.

  • The age of the borrower is also a determining factor for approval of the loan. Usually the applications of individuals within the age group of 30-50 is considered most stable, since they have decent years of service left.

    The application from retired personals is considered the weakest for obvious reasons. The number of working years is also an essential factor that is checked before sanctioning of the loan. The personals with longer work experience are preferred over those with less experience.

  • The loan gets approved more easily if the individual is moving to a completely ready house rather than the one that is still under construction. Sometimes sanctioning of home loans for under construction houses become risky since there is a slight chance that the construction may get stopped midway leading to major chaos.

Nowadays when the banks are lowering their interest rates to attract customers it seems that getting home loans approved is not a big deal, but actually it involves several aspects and it is quite a headache to get the whole process completed without any hassle.

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