Home loan is
the loan which is given to people who wish to purchase or construct a home. The
property for which loan for home has been taken is mortgage to the bank as a
security deposit till the loan is paid. Since it’s not a desirable ride as it’s
quite thorny and for initial years it’s hard to feel at home. If a ” picture
perfect home” is your next call then be geared up to face the harsh realities
of the financial world out there :
Preliminary rejection trouble
Many of the loans
for home applications do not even sail through the preliminary verification
process because of the incompatibility between the borrower’s qualifications
and lender’s requirements. Non-compliance of some of the standards facilitates
rejection of your application; there are a number of criteria to be taken care
of like income criteria, age criteria, lack of proper documents.
Cost of applying: Is it Refundable or
Not?
Yes along
with every application for home loan you are asked to shell out around 0.25% to
1% of the loan amount as demanded by the respective bank which is generally
“not refundable “.
To obtain
the certainty about the refund you need to get that in writing from the
authorities concerned, which can be a tiresome job again.
Desirable loan may still be a myth.
Even though
you get through all the verification process and your application fees is even
intact
The bank
hardly works to provide you a desirable sanction.
The amount
that can be financed typically depends on the status of the borrower
(resident/non-resident), type of loan for home (renovation, property purchase,
property extension) and the financial institute. It is generally offered for up
to 80-85% of the cost of the property.
The amount
of loan sanctioned is subject to the repayment capacity of the borrower.
Several factors are clubbed together ranging from your monthly income,
financial history, credit card usage history, bounced checks (if any) to nature
of your employment to define your credibility. In case your eligibility falls
short than the required then you are left with three options, one of forgetting
about the loan for home or
wearing your convincing shoes and ask people to be your co- borrower or just
bid off your NSC’s , provident fund, LIC policies ,funding home renovation etc
as collateral.
The common fix about the interest
rate regime?
The two
famous loan regimes of the financial world are” simply puzzling”. Every
borrower has an option of either going for a fixed rate or floating interest
rate. Moreover after deciding on the regime the underlying meaning of the
contract may create undesired havoc.
Moreover the
fixed rate regime is not a safe bet, it pitches you against a fixed rate that
can be changed in every 2 years. So ironically you can call it ” the volatile
-fixed rate” because all the catches lie in the fine prints of these contracts.
Bridging the gap
The banking
experts evaluate the value of the property according to their predetermined
standards. The amount evaluated by them may lag behind the actual market price
that pushes you to eventually shell the difference from your own pocket.
Dread of the down payment.
Already the
processing fee and evaluation difference might have created a whole in your
pocket but that’s not the end, because an initial down payment formality still
awaits you. For a loan for home of 10 lakh this could mean anything between 1-2
lakh, ready availability of this amount is a prerequisite for a smooth
sanction.
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