Many people need to take a home loan to buy a house. Even if you have money in your bank account, experts recommend funding your property purchase with a loan because of the many benefits it offers. It’s not wise to save enough money for years, spend it on purchasing the property, and then be left with nothing except the home. However, even if you have a good credit history and stable employment, you may end up having your loan application rejected. In such a scenario, you must understand what NBFCs consider to approve your home loan.
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A lender may reject your home loan application because of many factors, depending on the property’s location, builder’s reputation, your credit score and credit history, age, employment, and others. In fact, two individuals with the same credit rating may have different outcomes from their loan applications.
So, here we are going to discuss a few common things that NBFCs consider while approving your home loan.
Age
Age is an important criterion that money lenders look at while approving your home loan application. Ideally, people from 30 to 50 years of age are preferred, as borrowers in this age group are considered to be more financially stable than others. They are still in their working years, which means they have enough time to pay back their loan. According to the eligibility conditions of many lenders, your age must be at least 18 years at the time of loan application and maximum 65 years at the time of loan term’s end.
Credit Record
NBFCs always give preference to borrowers with responsible financial habits. They check your credit score to determine your creditworthiness. If you pay your credit card bills and EMIs on time without any late or missed payments, a home loan provider can easily judge your financial standing.
A credit score is a 3-digit number that is assigned to you based on your history of payments. Ranging from 300 to 850, a score of more than 700 is considered good by lenders. The lower your score is, the fewer chances you have of loan approval and the more interest rate you will have to pay. If you have a high credit score, you are likely to get your loan approved faster. But if you have the habit of defaulting on your regular payments, the lender may see you as a borrower with low credit worth.
Check your credit score here and see if it is good enough to get a quick loan approval. If not, use the tips mentioned in this blog to improve your credit score and then move on with your loan application process. If you keep applying with a low credit score, you will add to the rejections, which may further damage your credit rating.
Employment
NBFCs prefer borrowers in certain occupations more than others. Government employees and PSU workers are most preferred by lenders, as their job is considered to be stable and permanent. Self-employed individuals with the stable position are also good candidates for a home loan. Your occupation is important, as your repayment capacity largely depends on your income.
A borrower who switches jobs frequently also gets a negative impression. That is why some of them ask for your salary slip for the last 3 months. If you are a self-employed professional, you have to show last 6 months’ bank statement and last 2 years’ income tax returns to prove your income stability. However, each loan application gets equal treatment and the approval is based on several other factors apart from your employment.
Work Experience
Your work experience matters a lot while getting loan approval. The longer you have served in the industry, the more preference you get from the lender. For instance, a person with 10 years of experience will be preferred over an individual who just joined. Most NBFCs prefer people who have been serving in the same company for a couple of years and consider them stable borrowers.
Family Income
Purchasing a home is not one individual’s obligation, but the entire family may contribute towards it. So, NBFCs also consider your family income before approving your home loan. In addition to meeting other eligibility conditions, NBFCs also require your combined family income to be at least ₹ 3 lakhs. If other family members are working, both your and their income are considered to determine your loan repayment capacity.
Location
NBFCs also consider the location of your property while approving your loan. Ideally, the lender will prefer funding a property that is located within the city they have an office in. They may reject a loan for a property that is located beyond city limits.
Repayment Tenor
The earlier you agree to repay the loan amount, the more preference you will get from your lender. Although you may choose a loan tenor of up to 25 years, the shorter your tenor is, the better chances you have of loan approval.
Relationship
The older relationship you have with the lender, the higher is your chance to get a home loan approval. NBFCs value their previous customers because they are familiar with their credit history and financial habits. A person who has already repaid a loan without any issues is obviously preferred over the one who has no previous history with the lender.
Loan Purpose
You have higher chances of loan approval if you are planning to buy a ready-to-move in house. a property that is not constructed yet is considered riskier by lenders, as the lender may delay construction or possession or may fail to get the required permission from the government. Similarly, it is easier to get a home improvement loan rather than a plot purchase and self-construction loan.
Surplus Income
NBFCs prefer candidates who have enough surplus income even after paying the EMIs. Lower surplus means that you have to stretch your finances to repay the loan, due to which you may be at risk of loan default.
So, look at the abovementioned points while applying for a home loan at Clix Capital. Take advantage of our easiest loan application procedures and eligibility conditions that are quite easy to meet by people of all financial standings. Apply with us and stay safe from running pillar to post.
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You can also reach out to us at hello@clix.capital or call us at 1800 200 9898
