Spend, Save and Invest Smartly
Buying your own home is a dream you could soon realize. Availing a home loan is quite simple these days if you have a good salary and all documents are in order. However you cannot take the sanctioning of your home loan for granted and being aware of what could go wrong when availing your home loan is a step in the right direction. Remember a recent advertisement on TV where a big businessman applies for a loan at a bank and an ordinary working class person also applies for a loan at the same bank. The businessman is made to wait by the bank officers while the working class person is called by the bank officers, treated well and the loan sanctioned.
If you have availed of a loan/credit card in the past from your bank or any bank a CIR (Credit Information Report) is created by the bank. This shows your repayment record on the loan. (Whether you have made your repayments in time). Your credit information report is sent by the bank to CIBIL each month and you are assigned a score (300-900).If your repayments are made on time your score is over 700 and if not they are below this score. Your credit information report (CIR) is shared with all banks and they decide whether you are eligible for a home loan. If you have delayed/defaulted your loan repayments in the past with any bank your CIBIL score is much below 700 and your home loan application is rejected. Tip: Make all your loan/credit card repayments in time with any bank so that your home loan application is not rejected by banks in the future. This keeps your CIBIL score over 700 and your home loan might be sanctioned easily by banks.
Banks gauge your repayment ability based on your salary. How much of your salary is left behind after making the repayments on the home loan. The money left behind from your salary after paying for all expenses savings and loan EMI’s is called the disposable income. You need to have a high disposable income so that banks are confident in your ability to repay your home loan.
If you have already availed a personal loan (or any other loan) or borrow on your credit card then repay these loans (borrowed amounts) before availing a home loan. Banks believe that you cannot simultaneously pay back so many loans and you would fall back/default on your home loan repayments.
You need to file your income taxes regularly so that your home loan is easily sanctioned by the bank. You need to file your income tax returns for at least 2 years before applying to banks for the home loan.
If your relatives have availed a loan and you are their guarantor then banks would hesitate to sanction your home loan. Banks believe that you are already burdened with the debt/loans of your relatives. How would you make the repayment of your home loans in time? Follow these tips and rest assured your home loan sanctioning would be much easier.