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10 Factors Finance Company Consider Before Approving Home Loan​

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It’s commonplace for salaried professionals to receive unsolicited home loan offers from tele-callers. The general belief, therefore, is that home loans are easy to get approved. However, financial institutions don’t approve loans at the drop of a hat. They can reject a home loan application for many reasons, like builder’s reputation, property location, etc. We will take a look at factors that financial institutions consider before approving a home loan application.

 

Credit History

Financial institutions will always look for prospective customers with immaculate financial records. Your credit history becomes a major determiner of how easily you get a home loan. Lenders have access to your credit reports, which are a cumulation of your credit history information from a variety of sources, such as credit card companies, banks, collection agencies, and government agencies.

 

Age Of The Applicant

Financial institutions would want their applicants to be between 30 and 50 years old. People in this age group are healthy & financially stable. Applicants who are more than 60 years of age need strong credit history to qualify for a home loan.

 

Occupation Of The Applicant

Government and PSU employees always find favor with financial institutions as their jobs are much more stable. Financial institutions also prefer doctors, engineers, chartered accountants & employees of highly-ranked companies. For applicants who work in small companies in the private sector, getting a loan approval could prove to be more demanding than otherwise.

 

Applicant’s Work Experience

The duration of the applicant’s professional life is an essential determinant of his/her loan eligibility. Financial institutions are inclined to approve loan requests from applicants who have more than 10 years of work experience. They also look at your current job duration. That is why frequent job hoppers are much more prone to rejection.

 

Property Distance From Financing Branch

Financial institutions always prefer to process applications for properties that are within the city limits or accessible areas. For properties located in remote or less accessible areas, banks will hesitate to finance their applicants.

 

Existing Relationship With The Bank

If you are an existing customer of the bank for a certain period, rest assured that your loan application will be at an advantageous position compared to a first-time applicant. Banks will always want to retain their customers by offering attractive cross-sell options to the latter.

 

Clubbing Spouse’s Income

You are applying for a home loan. If your spouse is also working, then club his/her income along with yours. Your application will have a higher chance of approval. If you are male and married, take the loan in your wife’s name to enjoy a lower interest rate.

 

Loan Purpose

Your application stands more chance of approval if you are buying a ready-to-sell property than an under-construction one, as there’s a risk that the latter may remain incomplete due to non-compliance with prevailing rules.

 

Down Payment Amount

The more down payment you make, the higher the chance of approval of your home loan application. Banks feel more confident about your financial capability when you make a down payment of more than the necessary amount.

 

Documentation

If your necessary documentation (KYC, income proof, bank statement) is available without any hassle, and if you can submit additional documents upon request (to further strengthen your case), your application stands on steady ground for approval.

 

To conclude, keep these points in mind when applying for a home loans in India – and your application will stand a high chance of approval, thus allowing you to own that much-desired property!