Home loan eligibility criteria: A recent report from NoBroker reveals some of the most common mistakes people make when applying for a home loan. If you’re preparing for a loan, keeping these important points in mind can help you avoid significant losses and delays.
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Home Loan Guide: Home loans are a great support for those dreaming of owning a home. However, even a small mistake during the application process can shatter your dreams. A recent report by NoBroker reveals that most buyers make mistakes in understanding the intricacies of the loan. In this report, we will explain these mistakes and their solutions in detail so that your loan can be approved easily.
Choose an EMI that your pocket can afford
People often set a high EMI without considering their net income. They assume that their income and interest rates will always remain stable. Amit Agarwal, co-founder and CEO of NoBroker, says that the EMI should not exceed 30-35% of your monthly income. He advises people to choose a loan with a long term to keep the monthly installments low. Additionally, an emergency fund should always be set aside for difficult times.
Don’t forget other expenses beyond the loan installment.
When buying a home, people focus solely on the monthly EMI. They often overlook initial expenses like stamp duty (5-7%), registration fees, brokerage, and processing fees. Subsequent maintenance, insurance, and property taxes are also not factored into the budget. According to Amit Agarwal, it’s important to prepay the loan whenever you have extra money. This significantly reduces the interest burden.
Income and credit score alone aren’t enough.
Borrowers often assume a good credit score and a healthy salary are enough to secure a loan. However, banks also take a closer look at job stability, business longevity, and financial discipline. If you’re a freelancer or have any deficiencies in your property documents, you may face difficulties in obtaining a loan. Banks examine stringent criteria such as the loan-to-income ratio (FOIR) and the property’s value (LTV) before granting a loan.
Lack of documentation causes loan delays.
Rishi Mehra, CEO of Wishfin, says that loan approvals are often delayed due to outdated or incomplete documents. People often send documents after taking photos on their mobile phones, when high-resolution scans should be used. Mistakes like mismatched names, missing floor plans, or submitting electricity bills older than three months can be costly. Always submit current and clear documents for a loan.
Choosing the right bank is crucial.
Each bank has different policies. A salaried individual approaching an institution that provides loans to businesses will face difficulties. Similarly, banks have strict rules for resale properties. Experts recommend researching several banks. Start with one where you already have an account, as you may receive priority there.
Special Preparation Required for Businesses
Banks are more cautious about those with unstable incomes. According to experts like Monga and Kathuria, non-salaried individuals should keep their audited financial statements up-to-date. Their bank statements should clearly show the cash flow of their business. For such applicants, a strong credit score and a larger down payment can be beneficial. This increases the bank’s confidence and significantly increases the chances of getting a loan.
