Home loan a is good debt. But delay in getting the loan could prove costly. Preeti Kulkarni explains how to avoid such embarrassing situations

The crucial phase in buying a home is the stage where you have already made your contribution for the purchase from your savings and commit to pay the rest within a specified period. Most buyers commit to bring in the money within a few weeks as they expect to raise the loan within the period. The risk increases if you have already sold your flat and have committed to vacate it within a few weeks. You can reduce your risk by getting your loan pre-approved by submitting your income documents. However, the pre-approval does not guarantee disbursal which hinges on a number of other requirements. Here is the low down on what problems could arise and how to overcome these obstacles.

INSUFFICIENT INCOME

This could be a ground for rejection at the entry stage itself. If the lending institution feels that you do not meet its eligibility criterion in terms of minimum desired income level, you could be refused a home loan. Unstable or irregular income streams, too, could be a reason for the denial.

Solution: To tide over this problem, you could get your spouse (provided he/she has an income stream to show) to submit the application as the joint borrower. The chances of your loan being sanctioned will go up, along with the amount you are eligible for, as the combined higher income is a source of comfort for the lender. Moreover, both borrowers are entitled to tax deductions on repayment of home loan principal (up to Rs 1 lakh) and interest paid (up to Rs 1.5 lakh) under section 80 C and sector 24, respectively.

BAD CREDIT REPORT

As part of the standard loan processing, banks and housing finance companies study the loan-seeker's credit history records maintained by credit information companies like Credit Information Bureau (India) (CIBIL). If they feel that your credit repayment track record has not been clean, your application could be put in cold storage. This is also the case with those who are paying monthly instalments on other loans.

Solution: Get a copy of your credit information report from Credit Information Bureau (India) Ltd (CIBIL) before applying for a home loan. If the details of any loan repaid in the past are not reflecting in your credit report - that is, if it continues to reflect pending dues - you can take up the matter with the lending bank concerned and resolve the issue before submitting the home loan application, to ensure hassle-free loan disbursal.

MULTIPLE LOANS

If you are already servicing loans, it could dent your perceived repayment capacity. If your assessed repayment capacity falls short of the lending institution's criterion, you could be in for a disappointment. Solution: Use your liquidity to extinguish personal loans even if this means having to take a home loan. A home loan is a 'good debt' since it is cheapest loans, it gets you tax breaks and helps create a life-long asset.

INCOMPLETE DOCUMENTATION

Loan disbursals are often delayed because of the borrowers' inability to provide documents related to the property or those relating to his income.

Solution: Before you finalise the deal identify someone who has already availed a loan in the same building from the institution that you plan to borrow from. Also check for pending dues to the society. "Simply put, the application could be rejected in the absence of any document that proves clear title to the property. It can also be rejected if the necessary approvals for constructing the property are not in place," says Subodh Salunke, general manager - operations, HDFC Ltd, Mumbai region. Also, if you are self employed, IT returns showing adequate income is crucial and the absence of tax document is often a cause for rejection.

UNKNOWN BUILDER

Banks are wary of giving loans to builders who have no track record and may reduce loan eligibility.

Solution: Before concluding the deal check with lenders whether there are any legal disputes pending against the builder. "There have been cases where the developer has sold one flat to 2-3 people. Once the bank comes across such fraudulent cases, the loan will not be sanctioned," says VN Kulkarni, chief counsellor with the Bank of India-backed Abhay Credit Counselling Centre. It is best to stick to builders of repute and good track record.

GROUND RULES

BEFORE APPLYING for a home loan, study the list of documents required by the lending institution thoroughly, as a failure to submit all the documents in the prescribed format could lead to the application being rejected.

IF YOU DO not fit into the bank/HFCs desired customer profile in terms of the minimum income level, you should put in a joint application, with your spouse as the co-borrower to meet the eligibility criterion.

PROCURING A copy of your credit report from CIBIL prior to submitting a loan request will help you get a clear picture about your credit history and its likely perception by the lending bank. It also provides you an opportunity to get your previous lender to rectify errors, if any, in the report.

IF YOUR PORTFOLIO comprises multiple loans, it could affect your repayment capacity, and thus chances of getting your home loan sanc-tioned.

BUYING A FLAT in a project being developed by a builder with doubtful credentials could result in the bank denying the loan and/or lower the loan amount you are eligible for.

Source:http://epaper.timesofindia.com/