Everybody dreams of getting their own home. Every Mumbaikar dreams to buy property in Mumbai. It takes a lot of hard work to make this dream come true. One of the biggest challenges people face while purchasing a home is getting their home loan approved. In order to help make this obstacle a little easier, we've compiled a guide of all the major hurdles most loan applicants face while trying to get their home loan sanctioned and added tips on how to navigate these blocks:
1. Verification: One of the most common dead-end borrowers face is right at the verification process. Every lender has a specific set of requirements which an applicant needs to satisfy in order to be deemed eligible for a home loan. When applicants do not meet these requirements, their loan application gets rejected. Examine the eligibility criteria of the lender you wish to get a loan from and see how you match up to boost your chances of getting through the verification process.
2. Processing fee: Most banks charge a non-refundable processing fee for application. This fee usually ranges from 0.25% to 1% of the loan amount or can be a fixed amount by the bank. Thus, if the applicant's loan gets rejected, they will not be getting the amount he spent as processing fee back. This is a major hurdle for applicants on a tight budget. Every applicant must take the processing fee into consideration while chalking out your budget is the best way to navigate this hurdle.
3. CIBIL score: Every bank uses your CIBIL score to assess your credibility. An applicant with low CIBIL score is often met with rejection. Make sure your CIBIL score is up to required mark six months before applying for a loan.
4. Insufficient down payment: For any loan to be disbursed, the bank requires the applicant to raise margin money and make a down payment which usually ranges from 10%-20% of the property value. If an applicant is unable to make a down payment sufficiently, their loan application gets rejected. That is why it is necessary to plan in order to save for down payment and then apply for a home loan.
5. Interest rates: Most potential home buyers often forget to conduct a thorough comparative analysis before applying for a loan. Studying interest rates before applying for a loan will help get the best interest rate possible for you.