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8 reasons why your loan might be

Abitha Deepak, BankBazaar.com

When you apply for a loan, banks judge your ability to repay the loan on various
counts including your age, income, job stability and primarily based on your credit report
-- which is a reflection of your true credit worth.

Here are some reasons you need to watch out for and guard yourself against to obtain a
loan without any hassles.

1. Your residential address is on the defaulter list!

If you live under the same roof as someone who has slipped up on a loan payment or
credit card dues and hence been reported to CIBIL, then the probability of your loan
application to be rejected is likely to be high.

The reason being your residential address will find a match with the one on the defaulters

2. Poor track record of credit card or loan repayments

You have been accumulating credit card dues over the years resulting in a huge pending
payment, which is well past the due date. Or it could be that you have slipped up on a few

In these instances, your name would have been reported to CIBIL. When a bank looks up
your credit card or loan repayment track record -- it would have a strong reason to reject
your loan.

Also, telephone bills and insurance premiums are likely to join this list, so do keep a strict
vigil on all your bills and credit repayments.

3. Too many previous loans and too little income

If you are juggling too many loans already, then your income minus the ongoing credit
repayments is what will be considered as your real income.

If another loan is likely to cause a severe strain on this income or make it unlikely for you
to be able to repay effectively, then your loan will be rejected.
4. Loan guarantor to someone who didn't pay up!

When you sign the dotted line to be someone's loan guarantor do exercise a lot of
caution. You must make sure the applicant you are vouching for has the ability to repay
the loan without hassles.

Unless and until you have strong reasons to believe so, do not rush to sign for them as if
they fail to repay for any reason you will be accountable to repay the loan on their behalf.
In such circumstances, where you have been unable to repay their loan, you will be
reported to CIBIL and this will reflect in a bad credit report.

5. Co-applicant has a poor CIBIL record

It is important for all the loan applicants to have a good credit repayment record. If you
have a clean record but your co-applicant has a credit card issue reported for instance,
then your loan application may not be considered.

6. You are a compulsive impulsive job hopper

Banks place a lot of importance on job stability and certain banks even insist that an
applicant needs to be employed with a particular concern for three years or more to be
eligible for a home loan.

Also, in instances where a reputed company's future appears unstable, the bank can
reserve its right to provide a loan to the applicant from that company.

7. You want a joint loan with your sister or friends

Though some banks might consider providing a joint loan to brothers who are co-
applicants, banks as a rule do not provide loans to sisters or a brother and sister or
friends, who wish to be co-applicants. However, you can choose to opt for your parents
as co-applicants for the loan.

8. Your loan application has been rejected before!

Remember it is not a wise thing to keep applying for a loan without any rhyme or
reason. If your loan application gets rejected, this is also recorded in your CIBIL record.

So weigh the pros and cons before you apply for a loan simultaneously to different banks.
Wait till you receive an offer before you apply to another bank. This will give you a
chance to rectify errors or update your credit record in case there is an issue with it before
you approach another lender.

Here are some pointers to be prepared for your loan before you apply for it:
a. Gauge your repayment ability. Calculate your net worth and evaluate if you are ready
for a loan commitment.

b. Get a copy of your credit report from CIBIL and other bureaus, where your records can
be found. Analyse them and figure out if there are any concerns in the report, which
needs to be addressed. For instance if you have paid all your credit card dues but this is
not reflected in your CIBIL record, then you need to approach the bank in question and
get proof for the repayment. You will then need to submit the proof to CIBIL and get the
information updated.

c. Ensure you have back up funds to pay your EMI for a bunch of months, for
emergencies like a job loss etc.

d. Make as much downpayment as possible and prepare well ahead to close the loan as
quickly as you can, to continue a good repayment track record. Moreover closing off a
debt when possible, will free up your resources for other uses or even for a new loan if
the need arises.

Buying your dream home? Remember

these 5 points!

Your dream home is beckoning you to hurry -- you have got your loan approved and
you think you have nothing more to worry about or take care of.

Well, its not exactly a rosy picture from here on -- you still need to evaluate aspects
related to your house carefully and bring them under the scanner to identify loopholes.
This is especially true of the agreement you need to sign with the builder.

Here is a five-point checklist that you need to cross check and validate in your agreement.

Point 1: Actual price of the house

The agreement you enter in with the builder details the various costs that you will need to
bear for buying the house. This would include the cost for utilities like electricity and
water, parking space, various taxes and, in some cases, even the registration charges.
However, the builder may then levy some extra charges for any of these.
What you need to do:

• Check the agreement very carefully for all the charges applicable.
• If possible, get the agreement checked by a lawyer for any missing or hidden
charges and get the anomalies (if any) rectified by the builder.
• If the extra charges are for alterations made to the original plan, ask the builder
for the sanction letter provided by government authorities for such alterations.

Point 2: Actual size of the house

The agreement would clearly mention the size of the house you are purchasing.
However, there is a clause which states '. . . the plans, designs, and specifications are
tentative and the developer reserves the right to make variations and modifications. . .'
Therefore, you may agree for a certain size, but the builder can give a different size.

What you need to do:

• Before freezing on your choice of a builder, do some research about the builder's
past projects.
• If possible, talk with other buyers who already have got possession about
problems faced by them.
• Try and include a clause in the agreement stating the minimum and maximum
size beyond which the builder cannot increase or decrease.

Point 3: Carpet area

The area of an apartment or building, not inclusive of the area of the walls is known as
carpet area. This is the area in which literally a 'carpet' can be laid.

When the area of the walls including the balcony is calculated along with the carpet area,
it is known as built-up area. The built-up area along with the area under common spaces
like lobby, lifts, stairs, garden and swimming pool is called the super built-up area.

The carpet area can be 15-30 per cent less than the super built-up area. However, you will
not come to know the exact size until the flat constructions is completed.

What you need to do:

• Purchase the property based on the carpet area of the flat.

• Ensure that this area is mentioned in the agreement.
• Try to get a clause included which will ensure that the contract can be terminated
if the builder provides a house with the carpet area less than what is mentioned in
the contract.

Point 4: Date of possession

The agreement normally mentions a tentative date of possession. However, there have
been instances where builders have delayed possession by more than a year.

What you need to do:

• Check the progress of the construction personally.

• If the progress is slow and would not meet the date of possession in a timely
manner, build pressure on the builder.
• Forming a society with other buyers sometimes helps a lot in getting things to
speed up at the builder's end.

Point 5: Completion certificate

On handing over the house to you, the builder needs to also give a completion
certificate. This is issued by municipal authorities who establish that the building
complies with the approved plan.

You would need this certificate for registration of your house and other government

What you need to do:

• If the agreement does not mention the certificate, ensure that the agreement has a
clause which states that the builder will provide the certificate while handling
over the house to you.
• If the builder delays for a long time, forming a society with other buyers
sometimes helps a lot.

Other than these five points there more aspects such as the quality of the construction,
management of the society, et cetera. For this you can try to add clauses to the agreement
or form a society to get the builder to meet your demands.

Since there is no industry regulator you can turn to for the redressal of issues, it is
important that you are aware of what you want and what you are getting.