4 Factors Banks Consider Before Accepting Your Home Loan Application

When deciding to buy a villa or villa plot in Bangalore, you may be having a list of things you want to consider. While you might be checking neighborhoods, square footage and amenities, mortgage lenders look for 4 major factors that help them decide on whether to accept your application and lend you money or not.

You might be eager to check all the luxury villa communities in Bangalore, or even swing by some of them, but without getting a clear picture of finance, you can make the offer. When you sit down with a lender, they happily listen about your plans and how grateful you will be after getting a home loan approved. But the most important things lenders consider are not the way you talk and of course, not the way you plan things. Here’s what they will see.

Credit score

To evaluate your buying power, financial institutions check credit score because it helps them understand your ability to pay the loan on time. While a low credit score doesn’t necessarily mean that you will not get the loan, it damages your quality of the loan you can get.

Down payment

Cash still rules, no matter how good or bad your credit score is. If you are capable of paying a large amount in form of down payment, bank would want to consider accepting your home loan application. At least 20 percent of down payment adds seriousness to your buying decision. If you can go beyond the 20 percent rule, it would be a great deal for you.

Debt-to-income ratio

Making a good income is one thing, paying the debt is the second. Mortgage ability is determined after assessing your capability to save and pay for the loan. If the institution is willing to give you home loan, they will first ensure your ability to pay it. They analyse your current debts and then they decide on your eligibility to get a loan.

Assets

A lender is always worried about whether the income of the borrower will remain steady or not. In some cases, banks ask borrowers to show some assets which can be considered as valuable as the loan amount you are taking. You will be required to provide original documents of the assets showing that your assets can cover any loss incurred by you to the lender.

As a serious home buyer, you should understand how important these factors are in determining your eligibility for home loan. Many home buyers simply rely on the banks and are scared about asking questions. If you are taking home loan, don’t feel the guilt because banks are not donating money to you. They are doing business and it’s your right to understand the process, ask questions and shop for home loan like a pro.

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