Few Challenges Faced while Applying for Housing Loan
Owning your dream home is made possible with the help of a Housing Loan. With a choice of lenders, which include banks and NBFCs disbursing Home Loans, opt for the best Housing Loan in India and buy your dream home. Getting a Housing Loan is easy, provided you meet the eligibility criteria laid down by the lenders. Despite the transparency offered by lenders, some borrowers face a few challenges. Read on to find out what they are and how best you can beat them and avail of a housing loan easily.
From the moment you draw your first salary, you start to make plans on buying a home. Savings alone are not sufficient to finance your home buy. Hence, the need for financing through a Housing Loan. Apply for a house loan and finance your home purchase. There are a number of lenders who dole out House Loans.
Taking a Home Loan is a huge liability. So, it is of utmost importance that you research well before applying for a housing loan. Lenders do offer guidance on how to proceed while making a Housing Loan application. Still, there are some challenges that Home Loan borrowers face, when applying for a Housing Loan. Listed below are the commonly encountered issues.
Here are Few Challenges Faced while Applying for Housing Loan:
1. Choosing the Loan Type:
Home Loans can either be fixed interest rate loans or floating interest rate loans. Interest rates in the case of fixed loans remain constant throughout the tenure of the loan, Irrespective of any change in the market rates, the interest on fixed loans will remain unchanged. If the market scenario reveals an increasing interest trend, it’s best to lock your Home Loan at a fixed interest rate and beat the interest rate fluctuations.
Floating interest rate loans are cheaper than fixed interest rate loans and hence, attractive among loan borrowers. However, if interest rate fluctuations are high, a floating rate loan can saddle you with a heavy interest burden, especially when the interest rates head north. On the other hand, you stand to benefit during a falling interest rate regime.
Analyzing the trend in interest rates helps you make choice on the type of Home Loan you need to take.
2. Your Credit Score:
Despite a Home Loan being a secured loan, lenders look for your credit score before sanctioning Home Loans. Your credit score is a reflection of your creditworthiness and your ability to service the Home Loan. A credit score of over 750 is what lenders consider as no-risk borrowers.
Currently, housing loan interest rates are based on MCLR, Marginal Cost of Lending Rate. Lenders add a spread and offer you interest rates. This spread is calculated based on your credit score. If you’re a good credit score, the spread will be less. On the other hand, if you have a low credit score, the spread will be higher. Ultimately your interest rates will also be high.
To make sure that your credit score stays high, make all your payments like other EMIs and credit card dues on time.
3. Non- Refundable Processing Fees:
Before you apply for a Housing Loan, double check your eligibility using an online Housing Loan eligibility calculator. When you apply for a house loan, the lender charges a processing fee which ranges between 0.25% – 1.0% of the loan value. This amount is non-refundable. In case, the lender rejects your Home Loan application for not meeting the eligibility criteria, you don’t get back the processing fee paid. So, check your eligibility before you apply.
A word of caution, Home Loan rejection by a lender will be reflected in your credit report and will have a negative impact on your credit standing. So, be very careful to check your eligibility to avoid rejection of your Home Loan application.
4. Insufficient Documentation:
In addition to the issues listed above, not providing sufficient documentation is one of the most common reasons why your loan application is not processed. Filling up the loan application is a tedious task indeed. Make sure that you provide correct and complete information. Append all the requisite documentation. Processing your housing loan application will be free of glitches.
Choose the Best Housing Loan in India, apply for Home Loan, resolve the commonly faced challenges, and buy your dream home.
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