Home Loan Issues

Getting a home credit is a protracted technique. However straightforward it may look in the bank's commercial, the reality remains that there are a ton of hiccups in the whole procedure. Here are the 7 most common issues faced by home credit borrowers in India. Each issue is discussed in detail, and proper remedies are mentioned alongside it. The target of this article is to ensure that your home credit becomes a hassle-free ordeal. 

1. Initial Application Rejection

Many applications fail at the very first eligibility screening due to mismatches in age, income, credit score, or incomplete KYC documents. Nearly one-third of first-stage rejections stem from low credit scores (below 730), frequent borrowings, or discrepancies in submitted documents.

Remedies

• Pre-Check Your Profile: Use online eligibility calculators on aggregator platforms to ensure you meet age, income, and credit criteria.

• Boost Credit Health: Rectify credit report errors via services like Credit+ and maintain a credit score above 750.

• Complete Digital KYC: Leverage Aadhaar-based eKYC or video KYC to avoid delays in identity verification.

  
  

2. Non-Refundable Processing Fees

Processing charges range from 0.25%–2% of the loan amount and are largely non-refundable upon rejection. SBI, for instance, levies 1.5% (min. ₹1,000 + GST) up to ₹15,000, while ICICI caps it at 2%.

Remedies

• Negotiate Waivers: Look for “zero processing fee” offers on platforms like BankBazaar before applying.

• Get It in Writing: If a bank promises a refund upon rejection, secure a written clause in the sanction letter.

  
  

3. Sanction Amount Below Your Requirement

Banks cap sanctioned amounts based on your debt-to-income (DTI) ratio, salary history, credit utilization, and property valuation. This often creates a shortfall between the desired and approved sums.

Remedies

• Add a Co-Borrower: Combine incomes (spouse, parent) to improve eligibility.

• Pledge Investments: Use LIC policies or NSC certificates as collateral to enhance your loan quantum.

  
  

4. Interest Rate Volatility

Post-RBI’s MCLR norms, floating rates are reset semi-annually or annually, exposing borrowers to market swings. Even fixed-rate loans may contain clauses allowing periodic rate revisions.

Remedies

• Read the Fine Print: Clarify reset frequency and spread margins before signing.

• Opt for Rate Lock-In: Some lenders allow locking a floating rate for a specified period at a fee.

  
  

5. Property Valuation Discrepancy

Banks appoint independent valuers whose assessed amount may be 10–20% lower than the market price. This valuation gap directly reduces your eligible loan.

Remedies

• Get an Independent Valuation: Commission a certified valuer beforehand to anticipate shortfalls.

• Negotiate with the Seller: Agree on a price closer to the bank’s valuation or contribute additional equity.

  
  

6. High Upfront Down Payment

Most lenders mandate a 10–20% down payment before disbursal. If the bank’s valuation is lower, your upfront requirement further escalates.

Remedies

• Budget Planning: Maintain liquid funds or earmark investments (PF, mutual funds) to cover the down payment.

• Compare Lender Requirements: Opt for a bank with the lowest down-payment threshold.

  
  

7. Documentation & Title Deeds Delays

Missing or disorganized title deeds, NOCs, and builder approvals can stall or cancel processing.

Remedies

• Maintain a Checklist: Use an up-to-date document checklist infographic (ID proof, address proof, income statements, property papers) to track submissions.

• Digital Scans Ready: Upload clear, compressed PDFs in the lender’s portal to speed approvals.

This refreshed guide combines up-to-date RBI regulations, bank-fee benchmarks, and practical remedies—helping you navigate each hurdle confidently and ensuring your home loan application is a hassle-free journey.