Seeking home loan in India is not a child’ play in India, a borrower has to overcome many hurdles to get a housing loan. Eligibility obligation for a loan in India is strict and it is not easy for everybody who dreams to have a home to get a loan. There are many things that one should look in before they think of getting a loan from traditional Indian banks to purchase a home. Know the obstacles that you face to get a housing loan and take effective measures to overcome them and improve your chances of getting a loan.
Rejection of the loan application
You will be surprised when you see that your loan application is rejected in the initial stages. It may be due to a mismatch between the bank’s eligibility criteria and your credentials. Submitting improper documentation that does not let the lender verify your details will also lead to rejection of the home loan application. To avoid these bad surprises, you should check the eligibility criteria of the bank before applying and ensure you submit complete required documentation for processing a home loan.
Cost of applying for home loan
Banks charge a certain fee to process home loan application which is termed as processing fee and these charges would amount to 1% to 2% of the home loan application. Irrespective of the reasons behind the reasons for the housing finance rejection from the lenders, the banks are not likely to refund this amount. If the lender says so, get a written statement from them so that you can claim for it with a documented proof.
No adequate loan amount
The deficit in the housing finance sanctioned by the lender is most disappointing. The amount of you are eligible for is decided based on many factors like your age, income employment history, credit score. Lender considers assessing many factors to conclude the loan amount you are eligible for. If there is a shortfall between the amount sanctioned and the amount expected, you can add your earning spouse as co- applicant to raise the loan amount value or you can use your provident fund or LIC as collateral for the loan to get the same.
Interest rate dilemma
It is the biggest hurdle for Indian home loan borrower. You will have two options to go with while deciding the type of home loan rate of interest. One is floating and other is fixed. If you go by fixed interest rate option, the terms and conditions of the agreement state the banker has right to revise interest rate for every two years. Know the terms and conditions of the bank before opting one. If you are considering going by floating rate of interest, know how interest rates have dropped during low-interest periods and get some data about historic floating rate changes.