A "low interest" loan shouldn't mean you have very little interest in paying it back!
  • Criteria Banks Look at for Home Loan Approval

    The dream of owning a house can now be fulfilled with ease due to the ever booming market of home loans. Although relatively easy to obtain in this present day and age, there are criteria that banks look at before they approve a housing loan. Following the list mentioned below will ensure that you don’t have your home loan rejected.

    • Documentation – The first thing the bank looks at is the documentation that you have provided. This is arguably the most important process for the bank when it comes to approving a home loan. Even a slight discrepancy in your documentation may result in your home loan being rejected.
    • Credit history – Your credit history is what determines your credit score, and your credit score is one of the major criteria that banks look at before approving your home loan. A low credit score is almost certain to get your home loan rejected. Not only that, a rejection in your home loan will deplete your credit score even further, making it harder for you to get future loan applications approved.
    • Your income – Your income plays an important role in your home loan approval process. The bank processes your income with regard to your loan amount and accesses whether you will be able to pay off the loan on time. If the bank feels that you may not be able to pay off your loan, your application will certainly get rejected. One must always keep in mind their repayment capacity before applying for a home loan.
    • Debts – In the event that you have other debts at the time of availing a housing loan, the chances of your loan getting approved reduces drastically. This is simply because that it is more risky for a banker to lend out money to someone who is already committed to a loan.
    • Age of the borrower – The younger you are, the more likely it is that your home loan application is approved. This is so because a younger applicant has more time to repay a loan as opposed to an older applicant. For example, an applicant that is 55 years old may have only 5 – 10 years to pay off a loan, while an applicant that is 30 years old has a relatively longer time frame to pay off his debts. Again, one must figure out his/her repayment capacity before applying for a home loan.
    • Credit utilisation ratio – This is defined as the amount of credit used in comparison to your total credit limit. The higher your credit utilisation ratio, the lesser your chances of obtaining a home loan. One must always ensure that their credit utilisation ratio doesn’t exceed a particular limit, depending on financial needs.
    • EMI on the loan – Banks make sure that the EMI payable on all the loans you are currently paying off doesn’t exceed 40% - 50% of your income. If the EMI on your home loan goes beyond this percentage, chances are that your application may get rejected.
    • Mismatched signature – In case there is a discrepancy in your signature, your home loan is likely to get rejected. This is a criteria that banks never overlook.

    Understanding the points mentioned above and planning your application process beforehand will eliminate the risk of your home loan rejection to an extent. Always remember, a rejection in your home loan application only makes to harder for future loans to get approved.

    Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

    This Page is BLOCKED as it is using Iframes.