Criteria Banks Use To Evaluate Home Loans at Letzbank

Buying a home is a big milestone and a bigger financial commitment. A couple of decade back it was a norm to save and build a house closer to retirement age. But with better pay scales, economic development, lower rate of loan interest and numerous rebate and deductions being granted for home loans, today most of the younger people are buying homes by picking home loan. Over years the loan process has become smoother and undergone standardization. However contrary to popular belief that all home loan applications get approved, there is a substantial number that actually gets rejected for some reason or the other. The most common reasons pertain to documentation, low financial credibility or failure to disclose certain specific mandatory information. We are laying important criterion that banks and lenders use to evaluate a home loan application and assess the applicant, so that next time you walk in with loan application, you come out with an approval and key to your dream home.

Income versus Loan

This is obviously the first criteria banks would look into. Your income helps in giving visibility into your repayment capacity. No one will blindly offer and approve a loan that is far beyond your repayment capability. One can dream of a house that costs in Crores but there should be an income that justifies the affordability and purchase of such property.

Age Factor

Young applicants with decent income are more likely to get a home loan as compared to somebody old who has a good income. The reason is simple, younger age means longer life expectancy and sizeable working years ahead. The income, particularly in salaried job shows a gradual upward trend over years.  Any loan that is given based on present income is a safe bet for the lenders as they know that income will only increase with time and therefore servicing loan EMI will keep becoming easier for the borrower as the time passes.

Credit Score

Credit score is an important factor that banks and lenders look into. Credit score is built on your credit history and past financial track record. Whenever you pick a credit card, take a loan or enter into any financial transaction you tend to create a track record which becomes the backbone of your credit score. Credit Score is affected by factors like payment history, freshness of credit, type of credit and credit utilization ratio. If a borrower has a really short or insufficient credit history then that also works against him or her. New credit applications and loans affect your credit score adversely; same is the case where credit utilization is high.

Documentation

Documentation is not only an extremely important step towards making application but also one of the easiest. Make sure you understand the documents that are being asked for and their purpose. Take an exhaustive list so that even if you do not have one document,  you can refer to the list and provide some sort of substitute that is admissible. Common and standard documents required with application form for home loans are:

  • Duly filled application form with recent passport sized photographs
  • Know Your Customer form (KYC)
  • Identity proof like PAN Card, Aadhaar card, Voter’s Id, driver license etc
  • Address proof
  • Income proof- Income tax returns or Salary slip
  • Bank statements or cancelled cheque for signature verification.
  • Home purchase agreement or deed

Bank can call for any other additional documents as it may require to complete the application verification satisfactorily.

Collateral

Usually in case of home loan, collateral or security is the house property. In case there is a default in the repayment, bank can take possession and dispose off the property to recover the dues. Now when it comes to a new house, it is easy for the banks to assess the value and thus justify the amount of loan sought. However the challenge is in case of a used or old property that is changing hands on account of sale. The value of property in such case has to be deduced by a qualified valuer who considers factors like size, area, age and condition of the property amongst others. This is to ensure that the loan sought is justifiable and in case of default bank will be able to recover the dues by disposing the property.

Other Loans and liabilities

Bank may seek details of other loans and outstanding amount on your credit cards. Your income may be high enough to repay the EMIs on home loan sought but combined with other liabilities and loan repayments, your financial capability may be impaired drastically. This is why if you are neck deep in other loans or liabilities; there is a high chance of application rejection.

By now you would have concluded how important your credit score and repayment capability is as far as home loan process is concerned. This is why it is strongly advised that you begin to clear your debts, make timely payments on your credit card bills and refrain from applying for fresh loan or credit instruments closer to the time of applying for a home loan. You can also check your Experian powered credit score for free on www.letzbank.com . If the score is low, then move on to our practical guide on how to improve your credit score. You can also evaluate and assess various home loan offers from the known names in the lending sector and avail the best one right here at our portal!

Know Home loan closure Procedure at Letzbank

Buying a home is everyone’s ultimate dream for which everyone works hard and ties a knot with a bank for a long term, pays EMI with an aim to finally own a home of your own. However, some choose to make a pre-payment and get rid of long term commitment. However, when do not do the fore-closure formalities appropriately; you can ruin your happiness instead, therefore read things that one must do while considering a home loan fore-closure.

  1. Obtain all the original documents from the bank: Once you have closed the loan, the bank should give back all the originals deposited at the time of sanctioning you the loan amount. Obtain Mother Deed and Title deed wherever applicable. Therefore keep a note of original documents you have deposited at the time of availing home loan. When your documents have been returned, just check that they are in good shape without any torn or missing pages in it, before you sign on the acknowledgement letter to the bank. Try and visit bank you borrowed loan from to obtain the documents rather than trying to obtain the same through courier. Once you have obtained your originals, scan and keep the originals in a folder.
  2. Get “No Objection Certificate” from the bank: A “No Objection Certificate” from the bank will state that you have cleared your loan, and therefore it has no more interest in the property. When you are obtaining a No Objection Certificate from the bank you need to ensure that all the details regarding your home loan such as home loan account number, your name, address of your home, date of loan disbursal, date of loan closure, amount borrowed and repaid are mentioned in the No Objection Certificate. The bank should also clearly mention that there is no more loan due on the bank.
  3. Get the Lien removed on your Home from the Registrar office: There are cases where the bank creates a lien in registrar office which prohibits the borrower from selling the property. In cases where the bank has put a lien you need to get the lien removed to be able to be able to sell the property. It is always sane to do it immediately after you clear your loan.
  4. Get your Credit History/ Credit Score updated: Once you have paid your loan successfully, you should also update your credit rating organization such as Experian, Cibil, Credit Clear, etc. Once this is done you credit score will be enhanced and you will comfortably be able to borrow more loan if you wish.
  5. Obtain a Legal Clearance Certificate from your Lawyer: Obtaining a legal clearance certificate through a reputed lawyer will ensure that your home loan closure procedure is complete. And if you are planning to sell the house it will be a lot easier and quicker.
  6. Obtain detailed statements of the payments made to the bank: Having a track record of all the payments will ensure that you will have all solid proofs to prove that you have make entire payments at any point of time. And also if you have made a pre-payment or fore-closure it will recorded and reflect in a positive manner.
  7. Obtain Encumbrance Certificate from Registrar Office: Once you have obtained a No Objection Certificate from the bank and get the lien removed you need to apply for an Encumbrance Certificate at Registrar Office. The Encumbrance Certificate is a copy of financial transactions taken place on the property.

 

Avail Mahindra Finance Used Car Loanw ROI at Letzbank

With the arrival of different car varieties making presence everyday in the Indian market, and also the rise in disposable income of individuals; more and more people tend to look for a car upgrade almost every two years. This has led to a huge used-car market, which has its own audience as not everyone fancies a brand new car or can afford one.

The popularity in the used car segment has led to more and more banks and independent financial institutions offering used car loans to attract this very audience. However, before you jump into a used car loan process, here are a few things that you must bear in mind to ensure that you bag the best deal without much hassle:

Overview of Mahindra Finance Used Car Loan

Mahindra Finance is a leading non-banking financial company that is headquartered in Mumbai, India. Founded in 1991, it has served more than three million customers till date. Apart from vehicle financing, Mahindra Finance also offers SME financing, housing finance, insurance broking, fixed deposits and much more.

Why Pick Mahindra Finance Used Car Loan?

  • Mahindra Finance offers used car loans for vehicles upto 10 years old.
  • Greater Flexibility – Mahindra Finance offers greater flexibility while offering used car loans to its customers.
  • Speedy loan disbursal – Mahindra Finance offers speedy loan disbursals for used car loans.
  • Extended Loan Tenure – Get used car loan for upto 5 years.
  • Low Interest Rates – Mahindra Finance offers a competitive interest rate that is lower than other unsecured loans.

Benefits of Applying Mahindra Finance Used Car Loan on Letzbank.com

  • Broad Loan Range – Letzbank is a one stop shop for all financial needs. You can choose from a variety of loan offerings at one place without having to visit different bank websites.
  • Compare Loans – Easily compare loans offered by different banks with the simple filter tool according to your choices and requirements.
  • Service Charge Waiver – Get the service charge waived off that is applicable on all loan applications when you apply for a loan directly at Letzbank website.
  • EMI calculator – Calculate your loan EMI with ease with the help of Letzbank’s EMI calculator tool that only needs the loan amount, interest rate and loan tenure to calculate the EMI for you.
  • Quick Apply feature – If you are in a hurry or unsure which is the best loan choice for you, rely on Letzbank to help you choose. Simply click on the Quick Apply button and enter a few basic details and a Letzbank representative will contact you.
  • Efile IT Returns – Amongst the various services offered by Letzbank, you can file your income tax returns online with a click of a button. As some loans require filing of income tax returns as a mandate, this feature comes in handy.
  • Check your Credit Score online – Check your credit score before applying for a loan to know your eligibility and your credit health at Letzbank website.
  • Document Locker – Document Locker is a great tool offered by Letzbank that allows you to store your important documents online with utmost security and protection. This is useful when you need to apply for different loans and services on Letzbank and you can easily submit the documents online without much hassle.

Mahindra Finance Used Car Loan Eligibility

The eligibility criterion is determined according to the individual and the used car product.

 

 

 

 

 

 

 

 

 

 

 

Know Factors that govern your Credit Score at Letzbank

Normally no one is so much bothered about their credit score until your loan or credit card approval gets rejected. The moment your loan or credit card application gets rejected you get find out that your credit score was the culprit. Sometimes inspite of having a good track record and customer history your loan get rejected because your score is low due to other loans that are already prevailing. That is the reason why one should be fully acquainted with what is a credit score and what are the various factors that govern your credit score
What is a credit Score?

Credit score is a numeric value which is decided based on your credit history, repayment records, loans pending and loans applied for etc.  So anytime you apply for a loan or a credit card your credit score is seen based on which your loan is approved or rejected.

 

What factors govern your Credit Score?

 

35% of the total credit score is based on your Payment History

Payment history refers to as your financial transactions such as your loans borrowed, details of your credit card. So if you have missed an EMI or two it will reflect in your payment history. Even if you have a smaller revolving loan it may not lay an as positive impact while calculating your payment history can therefore lay a bad impact on your credit score. Having a longer payment history will be considered to analyze how your payment behavior would be in future. The only way to improve your credit score is to borrow as per your needs and not as per your greed and ensure that you are able to pay back in time to have a good credit score.

 

30 % of the total credit score is based on credit utilization of borrower

Say if you have a credit account and you have used a credit, and not able to pay back, it will lay a negative impact on your credit score. The financers are looking at the fact that you are financially responsible individual before they lend you the loan. So whether it is a loan account, credit account, mortgage loans, auto loans, or whatever debt you know you should be able to make payments in a responsible manner.

 

15% of your credit score is based on the entire length of your credit history

Wondering how the length will lay a negative or positive impact? It is important that you have a good borrowing and repayment history. Having a longer history will help your financer decide if you are good or bad customers based on the fact that you have made the payments in time. Having no history is bad as there will no basis to assess your reliability.

 

10% of your Credit Score is based on your Credit in use (10%)

10% of your credit score is based on the credit in use which means you’re the credit card utilization, the monthly EMI you bear for any loan, how much you are earning and how much you have saved in past in your retail accounts, the mortgage loans, etc.

 

10% of your credit score is based on new credit you want to borrow

This means that if you wish to open several credit accounts in a short span of time then the risk associated to give you a loan will be much higher, as your financer can suspect you to not make payments in time due to debt. The risk associated in lending you the loan can be higher if you are a customer who just opened a couple of credit accounts this would be mainly due to lack of long credit history, and your credit score can go low.

 

Now that you know what forms the basis of your credit score here are certain things to keep in mind:

  1. Do not open credit accounts all at once
  2. Ensure you make payments – EMIs, Credit Card bills, etc. in time
  3. Do not have a revolving credit
  4. Try and have good re-payment history since having no credit history is even worse.
  5. If you have a low credit score improve your score by visiting Experian at Letzbank.

Banks Vs NBFC’s: How to pick one while shopping for loans at letzbank

While looking for banking products there are two types of institutions you will come across, FBS and NBFC. FBS stands for financial banking sector whereas NBFC stands for Non-banking financial company. Generally uninformed people mistake for either of the two. Both the bank and NBFC are in a way similar in terms of financial products they offer. But there are contrasting differences between the two. Due to the existence of these two financial institutions the general crowd while shopping for a loan tend to get confused who to approach. This article will help you decide which entity to choose while seeking a loan.

Basic differences

While the banks and the NBFCs both have the similar function of providing personal or corporate financial products, the Banks are incorporated by the Banking companies Act in India, where as the NBFCs come under the Companies Act of 1956. As the Banks come under the Banking companies Act they offer more banking services than compared to the NBFCs, like accepting demand deposits, issue of DD and cheques. All the deposits made in the NBFCs are not guaranteed by the Reserve bank of India and hence hold a high risk for the depositor. There are no settlements or payment system set in the NBFCs. Money transfers between accounts can only be done in banking accounts, whether the bank is private or governmental sector.

Loan Application Differences

While applying for loans both the banks and the NBFCs are more or less similar. Based on the applicant’s credit status retail or corporate loans can be offered by the two entities. While the corporate sectors prefer Banks over NBFCs, the main market for the NBFCs is the retail sector. NBFCs facilitates loans that are consumer durables which last for an extended period of time such as home loans, vehicle finance loans, gold loans etc.

NBFCs are more lenient when it comes to its paperwork. They also have reduced eligibility criteria and requirements than compared to its counterpart. In Banks when applying for a loan one must have a good credit score. This will give leverage to the customer and a surety to the bank that the customer can be trusted. Since these processes are fairly low in the NBFCs and it is much easier for people to get a loan from the NBFCs, the result of that is higher processing fees and higher interest rates. Compared to the bank, NBFCs have faster processing time and loan applicants can get an approval and the disbursal of the loan amount is faster.

Now that you have a fair idea of the differences between the NBFCs and the Banks it would be easy to pick the more suitable of the two. Many factors have to be considered before making the decision between the two, such as credit score, tenure of the loan, loan amount, and the Interest rate. Based on these factors it then becomes easier to pick one of the two while looking for a loan.

Know Pros and Cons of Personal Loans at Letzbank

The market for personal loans is very high in India. With the banks now even offering pre-approved approved personal loans at really low rate of interest i.e. 11.50%, everyone who needs money goes for personal loans. Enlisted below are certain advantages and disadvantages of personal loans in India:

Advantages of Personal Loans:

  1. Easy to Avail: Availing a personal loan has now become a child’s play. You can easily apply for personal loans upto 25 lakhs at nominal rate of interest of 11.50% for maximum loan tenure of 5 years depending on the banking and your eligibility to avail personal loans. A number of banks offer pre-approved personal loans to its reliable customers. You can make use of Letzbank portal to compare various personal loans offered by a number of banking and non-banking financial institutions.
  2. Apply Online within minutes: You can now see your eligibility and apply for personal loans sitting at home or office without involving any third personal. Another easy way is to visit your bank to apply for personal loans.
  3. No Security/Collateral: Since personal loan are unsecured loans therefore, there is no need for submitting any security deposit or collateral to avail personal loan.
  4. Less Documentation: Personal loans requires you to just submit your KYC, proof of income and a photograph along with a duly filled application form for you to submit your application to the bank.
  5. Personal loans for all purpose: No matter If it is a medical emergency, a wedding, vacation, travel, or multiple debts you can apply for personal loan for any reason.
  6. Quick Disbursal: Personal loans are very quickly granted based on your eligibility and credit score and therefore take least time for processing and disbursal of personal loans.
  7. Schemes and Offers: Banks and NBFC’s come up with a number of personal loan scheme and offers time and again making personal loan schemes pretty attractive to avail for common man.

Disadvantages of Personal Loans:

  1. Eligibility Criteria: You need to hold a good credit score having a regular source of income to avail personal loans at low rate of interest. People who not have a good credit score are not granted personal loans at lower interest rates.
  2. Having a bank account: you need to have a bank account to avail a personal loan through any bank or non banking financial organization. If you do not have a bank account you are not eligible to avail personal loan.
  3. Fore-closure/Prepayments: Banks offering loan at low rate of interest do not permit the pre-payments. Also, the fore closure charges of such banks are 2% to 5% on the remaining amount.
  4. Penalty on missed EMI: If you miss to pay an EMI the banks pose heavy penalties to recover that amount.

So, like a coin has two sides there are pros and cons of Personal loans too and now that you are acquainted with all the pros and cons of personal loans choose see what you are getting into when you sign up for personal loan deals. Letzbank offers a number of personal loan product offered by a number of banks for you to choose from. If you wish to apply for quick personal loans online – Visit Letzbank now!