What does the bank view prior to providing you a home loan? MoneyMindz

By | 29/05/2018
What does the bank view prior to providing you a home loan | Home Loan Financial Advisory

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Approval or rejection of a home loan depends on varied factors from the reputation of the builder to your relationship with the bank.

Ritvika was on the lookout for a home loan for constructing her dream house. She was happily thinking “Finally, I am getting to construct my dream house!” However, all her joy turned into misery when none of the banks in her area approved of home loans! By the time an application for a home loan was accepted, Ritvika had already purchased a flat with some borrowed money from a friend!

Why do banks delay this so much? What do they look at? Read further.

1. Credit history

Banks favour clean financial habits and people having them will be approved for a home loan. How do you manage your money, do you pay EMI regularly, etc will be seen by the bank.

2. Occupation

Banks favour some occupations only. That’s partial, but that’s how they are. After all, what’s the guarantee that you will stay in your job until you clear all the debt? How much repayment capacity do you have? This is what they check.

3. Age

Obviously a 30-year-old had better chances of getting a loan compared to a 40-year-old and a 40-year-old has better chances of getting a loan compared to a 50-year-old! Those who are above 60 are refused loans. Age is crucial because it tells the bank how much time you have to clear the loans.

4. Distance

How far is the property from the bank? What’s the total distance between the financing branch and the said property?

An equity that is within the limits of the city is favoured. Banks hesitate to give loans if the property is far away.

5. Work Experience

How long have you been working in your current company? Half a decade? Once a decade? One and a half decades? Two decades? The bank wants to know. You shouldn’t be a frequent job shifter jumping from one job/company to another in short intervals. At least for three, you must be working in one company if you have to receive the loan.

6. Spouse’s income source

How much does your spouse earn if he/she is working? You and your spouse can repay the loan together, that’s their idea.

7. Repayment period

How quickly can you repay the loan? The quicker it is, the more they like you. Shorten your repayment period the next time you opt for a loan.

8. How familiar you are with the bank

Banks value their old customers so if you are an old customer they will more likely provide you with the loan.

These are some of the details banks see before deciding whether to approve your loan or deny.

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