Not all
banks fund loans for properties of all builders. It is critical to understand
from the builders which banks have approved them and which have not, as it's
possible that when you have decided to buy a property and go back to your
banker and check, you realize that the builder is not approved with your banker
making it impossible for you to get a home loan on the same from your bank and
then you would have to go to a different bank.
This is another unexpected reason in home loan rejection, where a builder may
figure in the list of approved builders of the bank, but a specific project
launched by the builder may not be approved. In addition, there are cases where
particular phases of the property( if it's a large project) may not be approved
by the banker as well, so it's important to check if the builder, the project
and even the phase of the project is approved by the banks to avoid unexpected
home loan rejections.
Most
customers do not check their credit scores and are mostly oblivious to the
same, there can be some old payments missed by the customers or some past
challenges the customer may have had, which they have forgotten about. The same
can be adversely affected one's scores, and a poor credit score and performance
can lead to rejection of home loans. It's very important that customer
regularly check credit scores and fix issues if any, around poor credit history
immediately.
Imagine a scenario where one is buying a house from the resale market. The
buyer and seller mutually decide a price of the property and the buyer decides
to go for a home loan to fund the purchase. At the time of sanctioning the home
loan, the bank would fund the loan basis the valuation of the property as
ascertained by them rather than the price decided by the buyer and the seller.
If the valuation amount is higher than the mutually decided price then there is
no issue, however, if the value is lower, then the bank may choose to give a
lower loan amount than required, or may reject the home loan application as
well.
The bank
does a detailed check on the property before giving a home loan which goes far
beyond just ownership related legal checks that most buyers of property focus
on. The bank checks on encumbrances, property documents, sanction plans,
construction plans, government body checks and clearances and tax paid
receipts, among others, along with ownership checks. These are mostly not
carried out by buyers in a mutual agreement between the buyer and seller, and
can lead to home loans on these properties getting rejected, if the bank does
not feel comfortable basis these documents. It's extremely critical for buyers
to try to do an elaborate check on the property before applying for a home loan
on the same.
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