You have seen more of the bank, its personnel and your bank manager than you have seen your house, your wife and your neighbours. But in the end, you face dejection when your home loan gets rejected.
Rings an ominous bell?
I have met several people who voice the same concerns and thought it best to spread the word on this topic so fewer people face such dejection.
Keep the following things in mind and you should be quite well-prepared to meet their daunting requirements:
Not only with your spouse but also with your employer! Too many jobs indicate a flightiness that bankers frown upon. When you cannot remain rooted to a place for long enough to EARN the moolah, how can they expect you to RETURN it to them!
We switch employers for various reasons – higher pay, better positions, improved work hours, desirable location, brand value, etc.
While it may seem usual to us, bankers must be convinced about your dedication to your employer; a good tenure indicates commitment and integrity – most important in terms of repayment!
Tip: Stay in your organization for at least one year before you apply for a loan. And put those skipping shoes away for a while, at least until your loan is sanctioned.
2. Cut those plastics and improve your credit score
Too many credit cards may earn you a kiss from your wife but not one from your banker! The greater your tendency to spend more than your income, the more a banker imagines his money flowing through your fingers like desert sand.
If you thought your days of keeping score got over when you graduated, think again! Indian lenders have become wiser and consult with companies such as Experian to obtain your credit history. Having a minimum score of 700 is advisable.
Tip:Having said this, do have one or two credit cards. You never know when you may forget to carry your wallet in your hurry to catch the latest IPL game atyour local cafe!
A rightly used credit instrument does substantially help you get a credit score.
Make all payments on time, do not apply for too many credit cards and home loans, maintain a reasonable debt-to-income ratio and keep a track of your score by obtaining your credit report from CIBIL.
That way, you can spot any unauthorized debts too, which may have been set up fraudulently without your knowledge.
3.CIBIL-beware of the ghosts from the past
That’s right! You did not read this wrong.
CIBIL, that ominous, national watchdog that keeps a track of your credit history, gives you a little pat on your back when you show timely payments to your creditors such as your post-paid mobile service provider, your credit card company and your two-wheeler finance provider. Make sure you’re prompt to bump up that score.
Tip: Do not go overboard with loans and post-paid services. Have an optimum mix of all, properly maintained.Unforeseen circumstances may cause your credit scores to dip.
But there is hope for people with average scores too. Private lenders such as Gruha Finance are willing to lend monies under these circumstances too but you should be prepared to pay a higher rate of interest as you shall be considered a bigger risk as compared to others.
4.Ask, and you shall receive. But asketh not too much!
Approaching too many lenders for a loan sends out a distress signal to your banker – does this person intend to survive on his income or his borrowings?
Why were so many doors slammed on his face before he knocked on mine?
You’re already 3 feet deep in the mud.
Tip: Take a good look around before you leap. Carefully select your prospective lender so that you know your chances of an approval are higher, thereby avoiding unnecessary adverse entries from showing up on your credit report.
And keep a careful eye on those reports, from time to time. Check the bank’s lending criteria. Keep the inflated ego aside for a while and make sure you meet most of their requirements, be it financial, social or geographical in nature, before you approach your bank.
Your best bet would be to first ask the bank in which you holdyour salary account.
5. Appreciation does matter
Houses come in all shapes and sizes. While we may prefer a variety in a buffet at a friend’s wedding to satisfy our gastronomical tastes, bankers unfortunately are more stereotypical.
Tip: Choose a house that has a good market value, is well located and easily saleable.
If the lender feels the house is undervalued, visit the local estate agents and surveyors to get the property correctly valued along with the recent sale sample in similar localities.
The brokers and agents may charge a hefty commission but get the job done when it comes to selecting the right property.
6.Keep your linen clean
There’s a saying – ‘washing dirty linen in public is obscene.’ Well, be careful not to dirty the linen in the first place! In this context, we refer to one’s past social and professional reputation.
Tip: Make your payments on time. Do not let your address be a familiar hot-spot for creditors. Take steps to reclaim your financial glory and get your address off the defaulter’s list by making all the payments and thereafter contacting CIBIL.
Even if one meets all specified guidelines, there are chances of getting a home loan rejected. Consider this unusual incident that I have come across is – an acquaintance of mine recently applied and was approved for a home loan from a leading housing finance company. Inadvertently, he used a cheque from an old, closed account to pay the lender the loan processing fee which of course was returned unpaid by the banker, and this lead to his loan application getting rejected.
Arm yourself to the teeth with the relevant knowledge and options before you embark on your hunting expedition.
Keep both your ears and that one brain on the alert mode when you do your research about home loan service providers and their schemes.
Once you make an informed decision, things are bound to fall in place. So go ahead and shop for a loan.
Ramesh Kumar has extensive experience in real estate in a career spanning over a decade. With his critical expertise in sales and marketing, he has successfully launched and closed out projects across a complete spectrum of properties like plots, budget apartments, comfort homes as well as luxury villas.
Ramesh Kumar holds a Post Graduate Diploma in Management from Bombay University and is currently serving as the Deputy General Manager – Marketing & Sales at Vakil Housing.