You are granted a insurance to buy a home when your eligibility (mainly for financial reasons) along with eligibility for your property complies with the lender’s policy. We’ll talk about why lenders may question your eligibility for a home insurance and may reject your application.
1. Bounce Processing Fee Check – Whatever the reason, bankers are really sensitive about the processing fee check and is considered very sacred. Ensure that your account has sufficient funds to be liquidated.
2. Financial Eligibility – As a basic rule it can be assumed that a salaried person can get 50% of his net salary and the self-employer can get 75-80% of his monthly income, paid as EMIs for any insurances. If you are already paying large cash insurances (EMIs), more than your money can handle, your application may be denied.
3. Guarantor of someone else’s insurance – Well, so you became a guarantor of someone else’s insurance. From a lender’s point of view, it’s a good idea to take out a insurance. So be careful while doing this.
4. Age of the property – Yes, lenders believe in the life of the property. They will not finance a drug that they think will not last for 35-40 years. a stranger!! This is how things happen.
5. Your Contribution – The lender requires a minimum of 25% of the total value of the property to come from your side. Any less than it and begins to tense.
6. Too many co-owners – To counter the point above, you may want to add more co-owners so that your eligibility goes up but the lender doesn’t like to have too many co-owners either.
7. Shared property with a relative not too close – EG. Shared property with a friend. The lender says, thank you sir – we won’t be able to fund it. Jointly owned by an unmarried daughter, cousins, colleagues – the lender is likely to reject the application.
8. Change in profession – Bankers are conservative and this is good for the economy. They don’t like taking risks like someone between changing jobs or someone leaving a job to start on their own – they’d rather wait on the sides until you’ve settled before they fund you.
9. Educational qualifications and work experience – they may not say it specifically but deep into a page of the policy there are limitations given your educational situation. A graduate without graduation is unlikely to be stable in the job and this poses a potential risk to the lender. Likewise, if you are job-hopping too early or you’re too new to the job, your chances of getting a home-purchase insurance may drop.
10. Your employer may not be worth all that money – you work for an unknown company in the market. The lender may ask you to obtain the financial statements of that company.