Rejection of Home Loan Application

Home Loan application: All You Need to Know About the Process

Most people in India end up taking a Home Loan to finance their property purchases. This has led to a constant demand for Home Loans and made the procedure of obtaining said loan, stricter. Banks are very stringent when it comes to approving Home Loan applications and usually consider a lot of things before they sign off on the loan. You have to be extremely cautious while submitting your application to the bank because a slight mistake in the form could lead to immediate cancellation. There are certain financial institutions like Bajaj Finserv that make the screening process very convenient and offer low interest rate Home Loans.
To make things easier on your end and give you a proper idea of what you are dealing with, here are some reasons your Home Loan application may get rejected.

Reasons for Rejection of Home Loan Application

  • Dubious Credit History

    The biggest red mark on your Home Loan application is a past history of faulty credit payments. If you have any unpaid debt, or maxed out credit cards, your prospects of getting a Home Loan are greatly reduced. This is because, most banks check your ability to pay back the principal amount with the accumulated interest, before giving you a loan. Hence, having an unreliable credit history will automatically work against you and make the Home Loan acquiring process all the more difficult.

  • A Habit of Job Hopping

    If you don’t stick around to a company for very long, you might find some serious obstacles in your path when you start looking for a Home Loan. A stable and well-established career can go a long way in getting you that dream house. But if you’re a job-hopper without solid financial backing, some banks might find it hard to give you a loan, fearing non-payment.

  • Loan for Non-Feasible Property

    Another reason why your Home Loan application may be rejected is if you require the Home Loan to purchase an old property. Certain banks have strict policies that bar loan approvals for the purchase of properties that are older than 20 or 30 years. So, if you are looking to buy such properties, make sure that the lender has no such barriers in place.

  • Continued Application Rejection

    If you have had your Home Loan application previously rejected, then you will find it hard to get your latest application approved since banks access and record such information. They will look back at your previous application and judge your new one on the same criterias they used to reject the old one. If the previous reason for rejection still stands true, you probably won’t get an approval.

Tips to Avoid Rejection of your Home Loan Application

Now that you know the reasons for loan application rejection, let’s discuss how to ensure your Home Loan application does not get rejected.

  • Maintain a Favourable Credit Score

    The importance of having a favourable credit score cannot be emphasised enough. A good credit score not only adds value to your Home Loan application, but also instils confidence in the lender about your ability to pay back the loaned amount.

  • Provide Correct Information-

    Another important tip you should keep in mind is to always provide true and correct information in your application. Concealing important information or providing false data is a sure-shot way to ensure that your loan application gets rejected.

  • Survey the Market-

    Instead of feeling dejected after your application gets rejected, scope out the financial market for banks that are less stringent about approving Home Loans. Bajaj Finserv, for instance, has an easy approval policy and also offers Home Loans with part prepayment facility.

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Decoding The Difference: Short Term Loan Vs Long Term Loan

Every business enterprise, big or small, eventually needs multiple sources of finance in order to function smoothly. This is especially true in the case of start-ups and new businesses that require large sums of money at the beginning to get the ball rolling.

Now, there are a number of ways to procure finance for your business or even get a home loan, but the question to ask yourself is whether you need a short term or a long term means of finance. The two types of loan are vastly different from one another in the way you go about applying for them and also in their interest payments and the amount of risk involved.

Understanding your business or general financial needs is the most prominent part of the loan procurement process, since a wrong assessment of your requirements could quite possibly lead to significant financial loss in the future. Once you have a clear idea about the kind of monetary support you require, you can go about deciding on the kind of loan that fits the bill.

First, let’s look at a short term loan definition to better grasp exactly what we are dealing with here.

Short term loans, also known as payday loans, are essentially loans with a validity period of 3 years or less. This means the loan has to be repaid within a time period ranging from 0 to 3 years.

Long-term loans however have a statutory payback period of more than 3 years. The repayment period for long term loans can extend from 3 years to 30 years.

You shouldn’t simply assume that the difference between the two is purely in the naming. The actual distinction between short term vs long term loans is quite wide and requires comprehensive understanding of the different components that make the two varieties of loans unique. Here, we’ll guide you through the process step by step, minutely dissecting each dissimilarity as we go along.

Interest Rates Charged

One of the most prominent distinctions between short term and long term loans is the rate of interest you are charged for them. Since the interest rate of any mortgage factors in components like loan period and risk involved in the transaction, the interest charged for short term loan is considerably lower that what it is for a long term loan. Since the interest rate is lower for short term loans, they are generally preferred by borrowers who have limited finances and can’t pay huge amounts of interest.

Risk Associated

Another major distinguishing feature for short term and long term loans is the risk associated with them. Since long term loan repayment is generally spread over an extended period of time, the risk involved becomes higher. The chances of the borrower missing out on the payment cycle are considerably increased when the time period of repayment is more than 10 years. With short term loans, the risk becomes less since the repayment process doesn’t extend beyond 3 years.

Ease Of Access

Generally, short term loans are easier to obtain than long term ones. The main reason behind this can be attributed to the fact that short term loans are financially risk-free, especially when compared to long term loans. The banks have more to lose with long term loans than with short term ones thanks to the large sums of money involved.

This makes short term loans ideal for borrowers looking for a quick source of finance without dabbling in the complications involved with obtaining a long term loan.

Purpose Of Procuring Finance

Another defining difference between the two variants of loan is the purpose that drives the borrower. With short term loans, it is usually the urgent requirement of cash on a short notice, while with long term loans, usually the money is needed for large investments or for projects that require large sums of money.

Some short term loan examples are account payable, short term leases, and bank overdrafts. Long term loan examples on the other hand include shares, bonds, long term bank loans, and retained earnings.

The monetary requirement of each client is distinct and there are a lot of things to consider before applying for a particular type of loan. You’ll have to carefully analyse your finances and the features of each type of loan available in the market before coming to a conclusion. Financial service providers like Bajaj Finserv offer end-to-end online business loans that provide a host of benefits to the borrowers.

Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv group, is one of the most diversified NBFCs in the Indian market catering to more than 6 million customers across the country. Headquartered in Pune, the company’s product offering includes Consumer Durable Loans, Lifestyle Finance, Personal Loans, Loan against Property, Small Business Loans, Home loans, Credit Cards, Two-wheeler and Three-wheeler Loans, Construction Equipment Loans, Loan against Securities and Rural Finance which includes Gold Loans and Vehicle refinancing Loans. Bajaj Finance Limited prides itself for holding the highest credit rating of FAAA/Stable for any NBFC in the country today.

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Mistakes to Avoid While Applying for A Personal Loan

6 Mistakes to Avoid While Applying for A Personal Loan


Seeking a Personal Loan can be an ordeal, and sometimes despite all your efforts, your loan application could get rejected. So, how do you make sure that your next Personal Loan attempt isn’t a disappointment?

Below is a list of some of the mistakes to avoid while applying for a Personal Loan, which will help you bypass some of the pitfalls of the application process. Several financial service providers, like Bajaj Finserv, who offer an easy online application process for Personal Loans, have services you can avail of to make the process less stressful.

  1. Failing to Consider Your Options: This is one of the most common mistakes made while applying for a loan. More often than not, you tend to gravitate towards banks that you have had dealings with previously, which may not be in your best interests. Make an informed decision by comparing interest rates of several banks. Once you’ve done so, you can opt for the scheme that best suits your requirements.
  2. Disregarding Credit History: CIBIL scores are more important than you think. All financial institutions that lend money have access to your credit scores and these scores play a major role in the lender’s decision to offer you the loan. If you maintain a good track record, backed up by a solid CIBIL score, your loan is likely to be approved.
  3. Failing To Disclose Other Loan Details: This can end end in a disaster for you. The main objective of banks is to make the most out of any business deal. Hence, it is natural for them to offer you a higher loan amount, which is beneficial for them. If you fail to disclose your loan commitments, there is a good chance you will sign on for more than you can handle.
  4. Uncertainty Over Loan Amount: You need to be absolutely sure about the loan amount you are applying for. Giving lenders a range or approximations is not an effective way to gain their confidence. This can be counterproductive as they may assume you are unreliable and unsure. It could result in your loan application being rejected.
  5. Not Familiarising Yourself With The Fine Print: Before taking a loan, you need to thoroughly peruse the fine print in the institution’s loan agreement. Clear any doubts you have with them and nail down the rate of interest and other processing fees. Most banks don’t allow the foreclosure of loans and if they do, they charge exorbitant amounts of money as penalty.
  6. Figure Out If a Loan Is Absolutely Necessary: A Personal Loan gives you a certain amount of freedom. You can spend the money anything. This is why these loans have high interest rates. However, Personal Loans are easily available provided that you meet the basic eligibility criteria. Bajaj Finserv, for instance, offers loans up to 25 lakhs with instant online approvals within 90 seconds.These aforementioned points are some of the most common Personal Loan mistakes and can be easily avoided with a little research and diligence.

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5 Common mistakes to avoid if you’re a doctor borrowing money

It’s a well-researched fact that good doctors earn more money than any other professional with the same amount of experience. This makes most doctors well-qualified to avail loans from banks and financial institutions. Some organisations, like Bajaj Finserv, offer customised Doctor Loans in India to assist medical practitioners with their monetary needs.

No matter how much money they make, many doctors choose loans which don’t fully meet their needs and often end up losing a lot. If you’re a doctor looking for a loan, it would help you if you knew what to avoid when borrowing money from lenders. Here is a list of common mistakes physicians make while taking a loan.

Investing In the Wrong Things

One of the worst mistakes doctors make while borrowing money is taking loans for the wrong reasons. For example, if you’re running out of money to pay your staff, borrowing money to cover their salaries puts you in more debt. Try budgeting your payrolls instead.

If you don’t need to buy new equipment, don’t buy it. If your existing equipment is faulty, send it for repairs instead. Most electronic and mechanical equipment can be refurbished and worn out parts replaced. Don’t let a burnt capacitor, worth a few hundred rupees, set you back by a few lakhs.

Not Addressing Their Specific Needs

If you want to expand your infrastructure or buy a new ambulance, don’t blindly go for business loans and vehicle loans. There are customised loans available for physicians to help them save their precious money. Use them to your advantage.

These loans, like the Doctor Loan offered by Bajaj Finserv, are designed exclusively for doctors and their requirements. In fact, doctor loan interest rates are relatively lower compared to regular business loan interest rates. They can also be availed for larger amounts and longer tenors which could go up to 60 months, or in some cases, even more.

Not Getting Involved With Money Matters

When it comes to money, many doctors leave their finances in the hands of brokers. And most of the time a broker is only thinking of how he can make more money and not how you can save more money.

Get dirty with your investments and negotiate your loans personally. If a bank can make the effort to customise a loan for you, you should make the effort to get personal with your money too. In fact, try to build a trustworthy relationship with your bank or lender if you are planning to borrow more money later. You could end up getting much better deals on your subsequent investments.

Not Exploring Their Options

Try not to rush when you deal with large sums of money. Some doctors will stop the search for financing options after approaching the first lender itself. This should be avoided at all costs.

With the variety and range available in the market right now, you could easily find yourself a better deal if you spend a little time talking to multiple vendors and assessing all the different offers.

Not Exercising Foresight

A lot of times, doctors will borrow money for things which won’t generate enough capital to recover the borrowed amount. Whether its equipment or a pharmacy, you need to see how much money you’re spending and how much money you’re going to get back. If you invest in something without understanding how it helps repay your loan, it makes no sense borrowing money and increasing your debt.

Before you invest in anything for your practice, ask yourself a few questions like. ‘Will this get me more patients?’, ‘Can I increase my fees by acquiring this machine?’, or ‘Will this help me cut down on existing expenses?’ Be realistic and don’t borrow money for things which don’t increase the value of your practice.

 

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Guide for the First Time Home Buyer

The Property Buying Guide for the First Time Home Buyer

The first time doing anything can be a challenge, more so when you are dealing with the real estate market. But if you are aware of valuable information about what you are dealing with, chances are you will find an amazing house. As a buyer, you need to be constantly on your toes and stay updated about the latest happenings, especially with the kind of volatility in today’s markets.

Your first home purchase warrants a comprehensive first time home buyers guide to help you through the purchasing process. Let’s take a look at this checklist for buying a new home-

Checklist for First Time Home Buyers

Realise Your Requirements

As a first-time home buyer, the first thing you need to do is figure out your requirements. What kind of property are you looking to buy? Will your current family fit into the new space? What sort of financing would you prefer? These are just some of questions you should ask yourself before you start looking for a property.

Identify the Locality

Once you know the exact property type you are looking for, you can zero-in on the locality next. Since buying a house is a long-term affair, you would want the locality to be somewhere your family can thrive while experiencing comfortable living. You can look for properties that cater to your family’s specific needs, which include the presence of schools, hospitals and shopping avenues in the neighbourhood. Also consider your potential home’s proximity to your workplace.

Lookout for Reputed Buyers

Buying a new home from a builder directly, without involving a realtor is a smart way of saving money on commission. But remember that, unless you have concrete knowledge of the real estate market, it’s not advisable to venture out on your own, especially when you are a newbie buyer.

Define Your Budget

Another thing to keep in mind while property hunting, is to limit your search to properties that fit your budget. Setting a budget prior to the purchasing process, enables you to save unnecessary expenses, since you might be tempted to buy a property that is beyond your financial capabilities.

Smartly Finance Your Purchase

This is one of the most essential factors when considering what to look out for when buying a new house? The way you finance your house will have a major bearing on your financing spending for at least the next decade. The intelligent thing to do is to analyse the options and choose the perfect financial service provider. Bajaj Finserv, for instance, offers Home Loan at lowest rate of interest in India and makes for a lower interest accumulation.

Consult an Expert

For inexperienced home buyers, getting help from real estate experts shouldn’t be a tough choice. Buying a new home without a realtor is not recommended to first-time buyers since they can miss out on a great property or price because of their ignorance. Also a realtor can provide you with the house of your specifications without you having to move a muscle.

Inspect the Property

If you like a particular house, don’t directly buy it. Building a new home inspection checklist is an essential step in the home purchase process. Take a careful look at every nook and corner of the house to identify any damage that might cause you trouble in the future. Also keep an eye out for pipe fittings and fixtures to ensure that everything is in proper shape.

Negotiate Extensively

Another important tip to remember while buying your first home is to negotiate with the seller. While being too forceful is not advisable since that can drive the seller away, you should stand up for your right to fair prices. State clear points as to why you think the property should be priced at a particular level and ensure that you bring the rates down to a desirable level. Unless it’s a house you really want, there is no point in paying excessive money.

Keep Your Documents Ready

Keep all the necessary documents ready, both for purchasing the house and acquiring the loan. This ensures that you don’t waste time on procuring the documents when you need them the most. Also make sure that all the legal formalities involved with the purchase are taken care of and that you have a valid contractual agreement with you.

Once you have selected the property, you can look for sources to finance your purchase. One of them is Bajaj Finserv, which provides Home Loans with part prepayment facility and nil foreclosure charges. What’s more? You only incur a processing fee of 0.8% when you apply online.

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Unexpected things that can wreck your credit score

A credit score is a statistical report that determines your credit worthiness for lenders when you drop in an application for a loan in their institution. It is also one of the most important aspects that can add value to your financial life.

You probably know that there are a number of factors that affect your credit score, say for instance, your repayment history, debt, and new credits. But did you know that there are other unexpected things that affect credit scores?

If you are having trouble with maintaining your score, look for tips to improve credit score, because even some of silliest stuff can bring you trouble. Below are a few surprising things you didn’t know that affect your credit score:

  1. Not Having a Credit History

    You may think that if you haven’t had any need to borrow a loan, your credit score will turn out to be good. But CIBIL scores do not work that way. One can only have a good credit score if they maintain a good balance with their loans and repayment which reflect on their personal credit report. But if you haven’t had any loan to repay, you will end up with a really thin credit file, which makes lenders wary about offering you financial support. Several NBFCs like Bajaj Finserv, provide instant Personal Loan with online approval within minutes.

  2. Taking Credit You Don’t Need

    Remember those calls from random banks ready to offer you instant loans when you aren’t even looking for one? Steer clear from them. Because every time you accept a loan offer such as that, your credit score takes a hit and it reflects negatively on your cumulative scores. The point here is, every time a lender makes a hard enquiry about your financial history with the credit board, you score goes down a tad bit. So weigh your decision carefully before diving into a loan.

  3. Getting Rid of Unused Credit Cards

    It’s acceptable for you to think there is no use for that old, unused credit card in your wallet. But finance is a funny business and there is this mechanism called debt-utilisation ratio which calculates your credit score based on the credit available to you and the credit you use. If you keep this ratio as low as possible, it can add up to 30 % on your report which automatically improves your score. But in case you are looking for a credit card, several lenders like Bajaj Finserv can offer you smarter alternatives.

    Here is an easy example: You have 3 credit cards—A, B and C—with varying limits. A has a limit of INR 10,000 with 50% remaining, B has a limit of INR 5000 with 100% remaining, and C is maxed out on its INR 2000-limit. Collectively, you have spent INR 7000 out of INR 17000. So in total and have utilised 41% of the credit available. Consider if you decided to get rid of card B because you rarely use it, the utilisation rate jumps to 58.3%, which will negatively impact your credit score.

    So whenever you are about to take a major decision about your financial life make sure to weigh your options carefully. Make the right moves and lenders will scramble to extend your lines of credit.

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Home Loan Options

5 Home Loan Options that You were Unaware of

Buying a Home Loan can be a tricky process, especially if you are not well-aware of the various options available to you. If you think that low interest rate is all that matters, you are definitely wrong. There are a lot more things you should know before taking a Home Loan. There are many financiers who offer various Home Loan options in India. Bajaj Finserv, for instance, ensures flexibility in providing Home Loans. Here is a list of options that suits people with different requirements:

Home Loan Options Available in India

  • Flexi Loans

    Flexi loan is a smart payment option in which your loan account is linked to your current account. The loan amount will be withdrawn from your current account till you reach the sanctioned limit. One important advantage of this option is that it allows you to draw money according to your requirement. The repayment of the loan is through the interest that you receive from the current account. Thus, it acts as an overdraft account, where you can also add your surplus income as well as savings. Bajaj Finserv provides Flexi Loans with multiple benefits and low interest rates.

  • Second Mortgage

    Suppose your first mortgage amount gets used up during the process of buying a new home, and you have no balance to spend for the rest of your purchases, including interior decorations and furniture. In that case, the second mortgage or the pari passu mortgage is the best option to go for. This type of loan allows you to mortgage the same property with different banks to borrow the required money.

  • Teaser Loan Option

    Teaser loans were introduced to cope with the fluctuating economy. In this, the bank charges a fixed rate of interest for a tenure of two to three years, and after this period, the fixed Home Loan interest rate changes to floating interest rate. Teaser loan can be beneficial for you if the interest rates in the future tend to rise above the prevailing Home Loan interest rates.

  • Proportionate Release Option

    If you are planning to buy a property from a reputed builder, there is a fair chance that you can get proportionate release option from your bank. In this option, the loan amount gets disbursed in instalments to pay the builders before the due dates. This type of loan allows you to manage your investments and raise fund for financing the down payment, especially when you do not have enough money to buy the property.

  • Bridge Loan

Bridge loan is an ideal financing option if you are planning to buy a new property after selling your existing one. It allows you to fund the down payment for your new house, while you sell your existing property. This loan usually has a tenure of one to three years, and is a cheaper substitute to personal loans. You can pay back the amount to the bank after selling the property within the tenure. If selling the property takes longer, you can also convert this loan to a mortgage loan conveniently.

Once you have a clear idea about the different loan options available, check out the wide variety of options provided by Bajaj Finserv and choose the one that fits your requirement the best.

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Looking to invest in a Mutual Fund? SIPs are your safest bet

An SIP or Systematic Investment Plan is where you invest a regular sum every month into a mutual fund instead of a lump sum payment. Once you’ve understood the meaning of SIP investment, you can decide whether this mode of mutual fund investment is suitable for you. This method helps you plan out your finances through periodic investments. Timely investments will not only help you improve your financial condition but also provide a safety net in times of need. You can also use these investments as collateral to avail of loans during financial emergencies. For instance, Bajaj Finserv offers you Loan Against Shares with rapid principal approval.

Types of SIPs

There are several types of SIP investments available in the market. The best SIP investment plan would be a combination of funds, such as equity, income, and gold-based funds. Selecting the best mutual funds for SIP investments will ensure that you have a diverse and lucrative investment portfolio.

Debt-based income funds place your money in debt-based instruments. These type of funds ensure average but safe returns. They are great when you’re looking for short-term or medium-term investments.

Equity-based balanced funds are ideal if your investment period is between 3 to 5 years. They are considered a medium to long-term investment because they are balanced funds that allow your money into both debt and equity securities.

Equity-based growth funds are tailor-made for you if you are a risk-taking, long-term investor, with a plan to invest for over 5 years. As these funds are based on stocks, the risks are higher. However, the returns that these funds generate are also predictably high.

Debt-based ultra-short term funds offer quick earnings on your investment. Choose this type of fund if you intend to invest for short periods (between 6 months and 2 years).

If you prefer alternatives to SIPs in mutual funds, you can always invest in Fixed Deposits provided by several lenders like Bajaj Finserv, which provide enhanced security for your investments.

Why Choose a SIP?

Now that you have a clear idea of the meaning of SIP investment, the next step for you is to acquaint yourself with the benefits that such investment packages offer. An SIP helps you maintain financial discipline by accustoming you to saving a fixed amount of your income each month. Another reason to invest in SIPs is the simplicity they offer—all you have to do is provide cheques to the investment management firms, who will take care of your investment portfolio. SIPs are also convenient and easy for you to handle as the average cost per share falls when you invest on a monthly basis, as opposed to investing in a single transaction. Also, with an SIP, the period of compounding is extended, which guarantees you higher returns.

If investing in an SIP is what you are looking for, financiers like Bajaj Finserv offer you different types of mutual fund investments with low transaction costs and transparent evaluations.

Checklist for an SIP

Some of the documents required for SIP investment include proofs of address and identity, a copy of your passport and PAN card, and a cancelled blank cheque. You will also need to submit the completed application form. You can make an online SIP investment once all the investment firm’s KYC rules are adhered to and your documents are in place. While the procedure for SIP investment is simple, it can take up to 21 days to process all your forms and documents.

Overall, SIPs offer you an investment avenue that helps gather high returns while retaining a significant amount of flexibility.

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