HDFC Bank offers home loans to customers which make it easier for people to dream of purchasing their own home. It also provides anHDFC loan calculator to help applicants calculate the EMI. You can check your eligibility through this HDFC Home loan interest calculator as well. But there are certain points that reduce your eligibility of applying for a loan. Here are some of them.
1. Credit score
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The most significant factor influencing your eligibility criteria is your credit score. The credit score is based on how consistent you are with your loan or credit card bill repayments. The credit score is available with the credit bureaus operating in the country. Regardless of the financial institution or the type of loan, you apply for; you cannot circumvent credit score checking. HDFC Bank too does the same while screening through your loan application.
An application with a very low credit score gets rejected immediately. This is because a credit score reflects credit health and depicts how you have handled your loans in the past. A good credit score gives an assurance of trustworthiness to the lender. They will then know that this particular borrower will not default on the EMIs and will definitely repay the loan.
If you already have a low credit score, then you need to take appropriate steps to improve it before applying for a loan. Repay your EMIs and credit card bills on time, dispute any inaccuracies with the credit report, and do not apply for multiple loans or new credits (as it results in many inquiries and reduces your score).
2. Discrepancies on your credit card
A home loan is a long-term loan which demands repayment capacity from the borrower. Therefore, banks may also observe your credit history. A credit report contains the entire history of the credit cards and loans you have opted for, and how regular you were with its repayments. It also contains late payments if any, and if you have the terms ‘written off” or “settled” against your credit accounts.
These negative remarks indicate that the lender has settled your account after realizing that you will not pay back the balance and that you have defaulted on your loan. Hence, the presence of these negative remarks leads to the rejection of your loan application.
Moreover, if there are other discrepancies like mistakes pertaining to your date of birth then it leads to application rejection. Make sure to rectify discrepancies of any beforehand to avoid application rejections.
3. Credit score of the co-applicant
Home loans come with high EMIs. So many loan applicants prefer to go for joint applications to reduce the burden of EMIs. The loan amount and the EMI is decided on the combined profile of both the applicants. Therefore, the lender considers the credit score of both the applicants since the credit health of the co-borrower matters equally. So even if the credit score of one applicant is high; the loan application gets rejected if the credit score of the co-applicant is poor. So make sure the credit score of your co-borrower is good or choose one with a good credit score to improve the overall score of the group.
Salary also plays a substantial role in defining your eligibility. Your loan application will get rejected if you do not match the salary criteria specified by the HDFC Bank.
There might have been cases where your application was rejected albeit your high income. This could have been because you did not satisfy the loan EMI to salary balance ratio due to a lower disposable income. Disposable income is the amount of salary you are left with after paying your monthly EMI. You can use the HDFC Home loan EMI calculator to help you with this calculation.
5. Stable job
Lenders prefer lending loans to applicants who have a stable job, as it ensures consistent repayment due to a stable source of income. A stable job is considered as a job where you have worked for more than 6 months. So avoid applying for a home loan immediately after joining a new job as you are a risky customer in the eyes of the bank. Wait for at least 6 months or a year in a particular job before applying for a loan.
6. Legalities of the property
If you have kept your property as collateral for the home loan, then make sure that you have all the proper documentation pertaining to the property. You need to submit the same to the HDFC Bank while applying for the loan. Your application will get rejected if you don’t have proper documentation or if the property is under some legal action. Therefore, verify all the property documents and details before applying for a home loan. You can go to the CMDA or sub-registrar’s office to make sure that there are no issues with the property legally or if it doesn’t fall under any government plan.
7. The lender list of approved employers
Most of the lenders have a list of approved employers. Borrowers working under these employers are considered to have a secure job and reliable enough to repay the loan amount. If you are working in a company that is not listed in it, then the lender might be unsure about your job security and repayment capability. Therefore, look into the NBFCs or banks that have your company listed. Shortlist a financial institution that has your employer listed, and apply there to avoid home loan application rejection.
8. High level of debt or already a loan guarantor
Your loan application might get rejected if you already have many debts which need to be repaid. You are thus a risky borrower. The same rule applies in a case where you are acting as a guarantor for another loan. This is because there is a risk that the other person might default on the loan and you will have to pay the dues as a guarantor.
Make sure that you also use an HDFC loan calculator while keeping the above points in mind simultaneously. The HDFC bank Home loan EMI calculator gives you an insight into your eligibility and repayment capacity.