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Money Guru | Income consistency must for home loan

Money Guru | Income consistency must for home loan
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First Published: Mon, May 17 2010. 09 12 PM IST

Updated: Mon, May 17 2010. 09 12 PM IST
I work as a broker and want to take a home loan. But the loan agent I approached told me that my income is not stable and so the bank will not consider my application. What should I do?
--Abhay Nath
From your question it is unclear whether you run a brokerage business or work in a broking firm as a salaried individual. Either way you would be eligible for a home loan provided all the requisite documents submitted by you are in order. Housing loans are repaid by way of equated monthly instalments and therefore regularity or stability of income is vital. Hence this factor will be strictly considered by any lender prior to approving the loan.
Age, qualification, savings history, investments, continuity of occupation, assets, liabilities, number of dependants are some of the other factors that will be considered during your appraisal process.
Buying a home involves substantial financial considerations and a home loan is a long-term commitment of 10-20 years. Therefore consistency of income is a crucial part so that you can service the loan throughout this tenor comfortably and hassle-free.
I have chosen a second-hand flat as my investment. Will the loan procedure be different from a first-hand buy? What obstacles I might face?
--W. Kuncoro
By second-hand I assume that you are referring to buying a resale flat whereas by first-hand I assume that you are talking of a property which can be directly bought from a developer or involves construction of a new house.
While there is not much difference in the loan procedure of a resale property vis-a-vis a new property especially on the credit evaluation aspect, resale property transactions generally have an urgency factor associated with them wherein either the buyer or seller wants the deal to conclude at the earliest possible. Therefore, one needs to be extremely careful on the documentation, which is one of the most important things while buying a resale property. You need to ensure that the property has a clear and marketable title, there is no existing mortgage or outstanding dues of any kind towards the property etc., as these will have a bearing on the loan amount or the loan itself.
Another point you need to keep in mind in the case of a resale property is the valuation of the property. The lender will have its own valuation parameters irrespective of the price you plan to pay.
Therefore, prior to finalizing a resale property, it is important that you select a good home loan provider, discuss with them the available options and if required also tap into their resources to be doubly sure.
I plan to take a home loan of Rs60 lakh. Combining my wife’s income, we earn around Rs30 lakh per year. What should we consider while ascertaining the payment tenor and amount?
--Harshad Saxena
For any loan you plan to take, your cash flow or source of income, your age etc., will play a very important role in determining the tenor and the loan amount. Hence it is important that you share with us details about your occupation, source of income and age for us to advise.
Renu Sud Karnad is managing director, HDFC Ltd.
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First Published: Mon, May 17 2010. 09 12 PM IST