What are the Things Lenders Consider before Approving Home Loans

What are the Things Lenders Consider before Approving Home Loans?

Ravi Kumar, 35 years of age based out of Hyderabad, had been looking for his dream house from a long time. Finally, he got one house of his choice, which satisfy his dream home. By just not wasting his more time, Ravi started applying for the home loan in different banks and financial institutions. Being a software employee, with good salary and benefits, he confirm himself that within no time his loan will get approved. Also many builders and lenders offers different interest rates with competition at lower interest rates for loans. He was relax, of getting a home loan, he was damn sure that with some few formalities, definitely his loan will get approved. But, to her surprise, it was reverse his loan application got rejected.

He was completely shocked, listening to the reason of his home loan rejection- Lender replied that his credit card history mage him ineligible for the loan. He applied for home loan in different banks and he was never know that credit score is that much important for getting a loan.

In the same way, many people don’t know the exact method of approval of home loan. Credit score plays a very significant role in your application of home or any other loan. Other factors like reputation of the builder and the location of the property, applicant relationship with bank. It’s recommended always to apply home loan with co-applicant, because if one has bad credit history other can compensate for that, if it has a good credit history.

Before approving home loan lenders go through various things, some of the common things look by lenders are listed here:

Credit History:

Candidates who has credit score 900 is considered as very good, candidate with 800 and somewhat below that considered as good credit score and 300 is the least credit score. And people who didn’t taken any loans their credit score is 0. Before applying for any loan, you must first check the credit score from any of the financial institutions that re listed one of is CIBIL. You just need to register with some payment of 470Rs/-.

Occupation:

Generally, lenders prefer some professions and occupation for approving loans. The applicant with government job and PSU jobs are most preferred because they have stable jobs and the chances of repayment are more for them when compared private job candidates. Professionals like - Doctors, Engineers, Accountants and Lawyers. Self-employed people get the lowest scores. Occupation also one of the important factor that is considered by the lender before approving a loan.

Age:

Age is one for the other basic thing that lender consider for approving a loan. Applicant with 30-50 years are most preferred more than that the chances of getting loan is somewhat difficult and people with 60 year fare the worst in the internal scoring model of banks.

Distance:

Lenders also focus on the distance of the property from the bank financing branch while approving a loan. A property within the city or town is most preferred by national banks. Beyond that the chances of approving loan are less.

Work Experience:

Generally bank considered people with more than 3 years of experience and if you have more than 10 years of experience, you get a good image in front of lenders and chances of approving loans increases.

Spouse's Income Source:

If you have bad credit history or you are not eligible for the loan, which you needed then you can add your wife as your co-applicant. If your wife is working. Also, you can also avail of home loan at five basis points below the normal home rate, in case, if you’re taking a home loan on your wife’s name. Similarly, many lenders prefer applicant, who are It assesses and paid tax last year than the applicant, who are IT assesses but don’t pay any tax.

Repayment period, the purpose of the loan and surplus income these are also some of the factors which lenders considered before approving for Home loan.