The home loan industry is one such industry which has been badly hit by the coronavirus pandemic. The lending institutions like banks, survive majorly on the lending business i.e. the loans. With coronavirus the home loan industry also took the toll. The real estate business and the inventories of the builders were hit hard which had a direct impact on the home loan businesses of the banks. With the lockdown being lifted in the city and in the country, the home loan industry has also started reviving. The home loan branches of the banks have slowly started their operations with minimal staff and new measures. While the pandemic has affected the pockets of the people, it has also increased the risk of funding for the banks. Many private banks have therefore implemented its new banking norms to safeguard their increasing number of NPAs.
The fresh look of the home loan industry starts with sanitizing the physical documents that are being collected from the clients. The internal working staffs of the banks also do rotate in batches of 15 working days as a safety measure implemented by some banks. This has increased the turnaround time for loan processing by another 5-7 working days. Banks have also started with online processing of the loans. The applicant can apply for a home loan through their online portals by also uploading the required set of documents for processing.
With the revival, banks have framed their new norms, altered their LTV ratios, changed eligibility criteria, etc. owing to the interrupted earnings of the people. The new home loan cases are done with strict scrutiny of the income & earnings of the applicant. Banks have also tightened their norms towards applicant’s profiles, industries, findings and income criteria. Prior to the pandemic effect, it was much easier for the loan borrower to apply with his desired choice of bank. Post pandemic difficulties for him have increased especially for those with interrupted monthly income. Although the lending rates have touched a new all time low of 10 years, the existing home loan borrowers with interrupted income are increasingly finding it difficult to enjoy the benefit of the reduced interest rates. The existing interest rates for many banks are yet to be revised to match the new prevailing low interest rates and so those who wish to enjoy the benefits of the low interest rate by switching their loan to a new bank face hurdles due to their interrupted income flow. Read to Know How To Deal With The Increasing Interest Rates Of Housing Loans.
Mentioned below are some of the new reforms of the banks.
1) For those applying for fresh home loan
- Having regular flow of income is mandatory.
- Banks check if adequate bank balance in maintained in the account for EMI processing in case of no income earned.
- Banks verify if any moratorium has been availed on other loans taken, if any proper justification is required if the moratorium is applied.
- For the applicant working in industries which are worst affected by the pandemic, only after careful study and scrutiny of his income documents, bank statements, profile, position and designation, family background, total family earnings, etc. approvals will be granted for his home loan.
- For the applicant working in such industries an earning co-applicant might be added to his home loan application despite his sufficient income.
- For self-employed, requirement of minimum net profit p.a. might be hiked.
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2) For those applying for balance transfer of home loan
- Regular EMI payment must have been done without delays.
- If applied for moratorium, justification through his salary account and other account balances can be sought.
- For self-employed business transactions and current account transactions along with the bank balances are scrutinized for loan transfers.
- Self employed associated with the industry most affected by the pandemic, previous profits of the company and its future growth plans will be considered for the loan approval.
- Good CIBIL score of the applicant and the co-applicant is mandatory for loan transfers.
- Home Loan Balance Transfer List Of Documents For Salaried
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Please Note: The requirements according to the new norms of the banks, are case specific and are purely at the discretion of the bank’s credit requirements or the bank’s credit managers, which differs from bank to bank.
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