Top 5 Problems Faced by HomeLoan Borrowers in India
Buying a home is one of the most significant financial commitments a person makes in his/her life. While many financial institutions in India offer home loans, getting your loan application approved may not be as easy as it sounds. All the lenders have specific eligibility criteria that you must fulfil the requirement to qualify for the loan. If you fail to meet the expectation of the lender, you may face several problems in getting your loan approved.
Here are the five most common problems faced by housing loan borrowers in India:
- Rejection based on eligibility criteria
Many times, applicants take the eligibility criteria for granted, and the lender rejects their application for not meeting the requirements. Therefore, you must carefully read the specific eligibility requirements of the lender you are working with. Make sure that you have all the necessary documents and proofs ready well in advance before approaching the lender. This will not only make the application process simpler and faster but also will save you from the last-minute hassles.
- LowCredit Score
The credit score is one of the most important that home loan lenders consider while assessing the loan application. Numerous applications get rejected as the applicant either has a low credit score or no credit history. Most lenders consider a credit score of 700 as an ideal score for approving the loan. If your credit score is less than 700, you must focus on improving your score first before approaching a lender for a home loan.
- Choosing the right type of interest rate
Borrowers are usually unsure about which housing loan interest they should choose betweenfixed interest and floating interest. If you choose fixed interest rate housing loan, the interest rate will remain the same throughout the loan tenure. If you choose floating interest rate, it would vary based on the market condition. The benefit of choosing a floating interest rate is that if the market condition is favourable, you will get the benefit of lower interest. You must choose the interest type based on your repayment capacity as even a slight increase in the rate can have a significant impact on your overall payment.
- Sanctioned amount lesser than applied
Besides the borrower’s repayment capacity, there are many other things that the lenders consider while approving the loan. These include credit score, financial history, outstanding loans, average bank balance per month, job security, bounced cheques and more. Based on your current financial standing and credit history, the lender may sanction a lesser amount that you applied for.
- Dealing with Paperwork
The process of availing home loan requires you to provide various documents including personal finance-related documents, property-related documents to the lender. Also, the lender may ask you to fill various forms. You must be careful with filling the forms as any mistake may cause a delay in the loan approval process. It is paramount that you make a checklist of the documents to avoid delay.