How Bank Approves Your Home Loan – A Guide

Admin| Last updated: September 13, 2017 | 0 Comments

Everyone, as per human instincts, strives hard to make their dreams come true. Though, it is straightforward and effortless for some people but brings a tough time for the others, especially the mid-level employees.

So, if you are one of the mid-level employees in Singapore and intending to fulfill your dreams of buying own home, then it’s time to avail the home loan. I see several groups of people opting for home loan package in Singapore at the best home loan rates. This literally opens a plethora of possibilities for everyone.

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Though, availing the loan these days are quite easy and convenient. People are now applying for the best home loan in Singapore, I see, but not limited to. In these days, people throughout the world prefer best housing loan, refinance and refinance the mortgage to possess their dream house.

You should know that every bank has some parameters to check the eligibility for a loan subject to credit score, gross income, the source of income and others. In this post, I have tried to make you acquainted with the things that a bank see. Let’s go through some basic things you must know about before understanding and make a checklist of all those criteria that a bank looks upon before approving a loan.

CREDIT HISTORY

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Banks and other loan agencies prefer to partner with people having clean financial habits. If you already possess a loan and pay your EMIs on time, you secure a trust among agencies. Such type of data is retained and managed by different agencies.

Therefore, on the grounds of your loan and repayment, a system of credit score has been implemented. This ultimately checks the eligibility and makes the loan granted. For example – if credit score lies from 1-10, then the more score will have more chances to win and the people having lesser value have higher chances of rejection.

AGE

Another important factor the bank looks before granting loan is the age. It is well known that the people of age group 30-50 are financially more stable and retain more numbers of working years that add value in repayment. Therefore, the bank and lenders understand these things as well as keep in practice. On the other hand, people of age group 60 and above doesn’t score high in loan appraisal.

OCCUPATION

Occupation is one amongst the most significant factors that decide the eligibility of home loan sanctioning. The banks on the ground of occupation consider granting of the loan. This is because it defines the way of repayment capacity.

People from government/PSU jobs are at the top of the priority. After that banks prefer professionals like a doctor, engineer, lawyer, etc. and in the last private employee and self-employed comes in the list of the bank with the lowest score.

WORK EXPERIENCE

When you apply for the loan, the bank may ask for some years you are working with the current company. The more experience you will have more score you will earn. For example – bank will prefer people of experience with 10 years over the people of 3 years.

INCOME SOURCE OF SPOUSE

The income of your spouse also matters subject to repayment capacity in case of joint home loans. When a home costs very high amount that your income can’t afford, you won’t have another option to rather than to choose a low-cost home. However, if your spouse is working, then the income of both will be combined to define the repayment capacity. Thus, the income of your spouse contributes to avail your dream home.

DISTANCE

When it comes to loan against property or mortgage, the bank analyzes the distance of the property from the branch you have applied for. If it lies beyond the same city or municipal area, the bank provides a lower score in approving the loan.

RELATIONSHIP WITH THE BANK

The old relationship with the bank is a worthy factor in approval of the loan. This is because the bank will be familiar with the entire financial status of past and current. Therefore, undoubtedly the bank will prefer those existing customer instead of a new relationship.

DURATION OF REPAYMENT

The lower the repayment duration will be, the more probability of approval will be. Therefore, the bank and lender give a high score for the people who choose the repayment duration of up to five years. As it goes up the score gets down.

LOAN’S PURPOSE

The purpose of your home loan also contributes to congregate a strong score. For example – The bank appreciate in approving a loan for buying a ready to move home, renovation and home repair. On the other hand, when it comes about under-construction, the bank hesitate. This is because under-construction home, constructing a new home or land are risky, which can stretch the time of possession or accomplishment.

SURPLUS INCOME

This is an added advantage to get your loan approved. After paying EMIs, if you retain a healthy amount, the bank will treat that you are financially healthy. On the other hand, low fund after EMI payment enhances the probability of defaulting in bank vision.

Now, you all be acquainted with the things that a bank analyze before approving a loan. So, if you intend to avail a home loan, it would be better to get prepared according to the above-said factors. As I see, people also used to go with refinancing home loan in Singapore and throughout the globe to ensure the best housing loan for their dream home. This literally builds a relationship of trust and provide a strong value towards repayment capacity like refinancing a mortgage, and etc.

Therefore, without losing your precious time get in touch with your nearest bank for a home loan and ask for the best home loan rates. Rest you will look after by the representative. Feel contented to like and share this post with your own ideas and experience that make others benefited.

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