Applying for Credit

Let’s presume that you have looked around and identified a few properties – one of which you might want to finalize asap. The best course of action is to firm up your budget by applying for a loan. This is because; most sellers would be ready to offer their maximum discount on the pricing, when they are sure that the transaction will go through smoothly. The risk of getting tied down in a delayed transaction is something all sellers would want to avoid. Also, sellers want to get their hands on the money quickly to meet their own financial commitments – possibly the reason to sell, hence they would try and find a compromise pricing. Ability to pay cash down is the ace card for a buyer in negotiation. Even developers will warm up to you once they know that you have lined up the finance.


The first thing to do is to find a mortgage lender. A number of Banks anf NBFCs offer home loans. Take your pick based on terms – pricing, option to choose fixed or floating rates, Pre-payment charges, processing fees etc. Negotiate whatever, you want to – the results might surprise you pleasantly. Though on rates, you may find some to be inflexible. Some lenders offer to send an agent to your house / office for discussions, picking up the form etc.


All Banks and financial cos. require you to fill out a detailed form. You may find it cumbersome, and the friendly bank executive may offer to fill the same for you, but beware! You do not want any discrepancy in the form to be the reason for your application to be turned down. Most of us balk at filling out forms – Just do it!
Home loan applications are fairly simple. Most require you to furnish credit and property related documents.


Credit related documents are - latest payslip of your spouse and yourself (usually last three months, Form 16, (ITR for the last 2 years – for self employed), Bank account statements for last 6 months, copies of ID proofs like driving licence / passport / PAN card etc. Be prepared with the details of credit and debits to your accounts – you should reveal all loans availed by you at this stage (the bank will find out anyway thru credit rating agencies – and then frown at your not revealing the same in the first instance).


Be prepared to reveal all sources of income. Some lenders also consider prospective rent on the property to be financed. Also helpful will be details of assets and liabilities – the lender may ask for proofs. Reveal details of all loans accurately. Failure to do so will in all probability result in your application to be turned down.


Property related documents are copies of previous sale deed, sale agreement, search report non-encumbrance certificate, sanctioned map, occupation certificate etc. Keep a set of the same for your records prior to submission.


Once you are ready, make a note of the application form number and head for your preferred financier.

Cheers - till my next blog