When you are taking a home loan for the first time, it is generally assumed that you are buying your first house. Buying a first house is a very big occasion in your life and you want to make sure that the process of buying your first house is trouble free. But this might not be the case.
Here’s the list of some problems you may face while applying for our first home loan
Getting the home loan application passed
Many of the home loan applications received by the banks or the financial institutions don’t even pass the first stage of verification due to discrepancies between the credentials provided by you and the bank’s requirements.
The discrepancies may be as follows –
Your age not in the bracket as required
Your income not in the bracket as required
You don’t have the required documents as required
How can you avoid putting yourself in such situations?
The best way to avoid such a scenario is by carefully checking the requirements of the lending banks and applying only to those which match your profile. Also, ensure that you have the proper documents handy and provide accurate details to the bank.
You don’t get the processing fee back
Bank charges a processing fee from 0.25% to 1% of the loan amount. This processing fee is not returned to the loan applicant even if the loan is not sanctioned. Although there are some banks who promise to give the processing fee back if the loan is not sanctioned but nothing can be taken for granted. A loan applicant should take this in writing from the loan provider that the processing fee will be returned back to him in case the loan is not sanctioned.
Getting into the good books of the loan provider & winning his confidence
Banks will sanction your loan only when they are reasonably sure that you will be able to return their money back.
There are several factors which a bank considers before they decide to sanction you’re your such as -
Your monthly income
Your Credit Score
Your employment details
If all these factors are in your favor than the chances of you getting the loan increases. In order to make your case strong you can also decide to add a co-applicant to your loan. However, only your spouse, parents and children can apply as co-applicants. If you have made sufficient investments to NSCs, Provident Fund, LIC policies, etc, you have the option of offering them as collateral against your Home Loan.
What kind of interest rate option to select?
Loan applicants have an option to select either fixed rate interest option or a floating rate interest option. Under fixed rate interest option, you will have to pay at the same rate of interest as decided in your loan agreement whereas in the case of floating rate interest option, your interest rate will keep on floating based on the market trends. If the interest rate charged by the bank increases than your interest rate will also increase and vice versa. While deciding about the kind of interest rate option you select, check with your bank to know more about the historic trends in interest rate fluctuations. Knowing the past trends will help you choose better between fixed and floating rates of interest.
You should know the documentation well
The title deeds and NOC documents need to be produced specifically in the bank’s format. If you don’t produce the documents in the format specified by the bank, your Home Loan will get rejected. To avoid being in such a situation, ensure that you know what documents are required and the format they should be presented in. Take care to get them ready within the stipulated time period as well.
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