One has a lot of things to think about while buying a house, and arranging finances for property purchase is arguably the biggest one. What most homebuyers do is rely on home loans to cover a major portion of the property cost. Financial institutions offer home loans that can cover up to 75%-90% of the cost of a property, depending on its value.
Now, before applying for a home loan, one needs to know how long the lender will take for approving the loan application. Ideally, this process should take about 5 business days for salaried individuals; however, this can differ from lender to lender.
There are cases where the approval for a loan application can get delayed, and this can cause unnecessary complications for an applicant. To avoid this from happening, learn about the most common reasons why a home loan application can face difficulty in getting approved:
1. Uncertain credit record
Every lender checks an applicant’s credit record before approving any loan application. If an applicant does not have a decent credit score, this can create problems with their home loan application, thus causing a delay in approval. This could also lead to an application rejection, which is why it is advisable to maintain a credit score of 750 or more.
2. Improper documentation
The documentation process has been a common obstacle for many borrowers to get past. This is because a lot of them are unaware of what the lender’s requirements are. Incomplete documentation can result in a delay in the loan application getting approved, or in some cases, even rejected. This is why it is always good practice to first check with the lender about their home loan documentation requirements so as to not face any complications.
3. Employment profile
If the borrower has an employment profile that indicates an irregular income or unsteady future, this becomes a risk for the lender. To improve the chances of a home loan approval, a borrower should be working for a reputed organisation and earning a steady monthly income.
4. High level of existing debt
If an applicant is already clearing EMIs for multiple existing loans, they might not be in a good position to take on another loan. This becomes a risk for the lender, which can cause a delay in the loan application getting approved. So, before borrowers apply for home loan plans, they should first focus on clearing their existing EMIs before doing so.
Keep these factors in mind before applying for a home loan. Today, lenders have made the process of applying for a home loan really convenient for applicants. With internet banking facilities, an applicant can submit their application for a home loan right from home and even submit all their documents online. This is a much faster process and also a hassle free one! Financial institutions also let users access a housing loan EMI calculator on their websites for free. This calculator can be used to learn about a home loan’s EMI payments beforehand. This would help in ensuring that there would be no repayment problems in the future.