Applying for Home Loan or Balance Transfer Home Loan as an NRI / OCI/ PIO

Applying for Home Loan or Balance Transfer Home Loan NRI / OCI/ PIO

Most of the times, its a dream for NRI to buy a property in his/her home town or clear existing home loan before they return India. We come across NRI/OCI/PIO buying property in India very frequently. There are a lot of doubts which seem to be repeated by most clients.

This blog would give an insight of the process so that one can avoid errors and rework.

Process for Non Residents Indian / Person of Indian origin PIO or Overseas Citizen of India  OCI for Home loan application.

NRI OCI PIO Home Loans
NRI Home Loan Balance Transfer

HOW TO APPLY FOR NRI BALANCE TRANSFER HOME LOAN ? 


First Step is to Decide the Power of Attorney (POA) Holder

The first step for any NRI/OCI/PIO is to decide who would be the POA holder. He/she has to be a blood relation residing in India preferably in a metro like Bangalore,Hyderabad, Mumbai, Mysore, or Pune.

Most of the banks ask for a Co-applicant. Your blood relative in India that is your parents/spouse can be a co applicant. You also need to convey the property ownership details .

In case you are buying in joint name i.e either your spouse / parents, he /she would have to be on the loan as a co applicant.

Please note the POA holder is the person who would be called in case you delay/ default on our loan.

Power of Attorney(POA)

The most crucial document you need to execute is the POA in the format of Bank that you are applying for the home loan. Each Bank has its own format for the Power of Attorney.

Do not execute a generic general power of attorney as most banks refuse to accept the same for the application. Once you have the power of attorney format of the bank that you wish to avail home loan from since you would be executing the POA outside India, you need to visit the Indian Embassy and complete the process.

In case your co applicant is an NRI you would need to execute POA for him/her also. Both POAs can be given to the same relative in India.

Please get the Power of Attorney checked from your banker before notarizing it from the embassy. Any errors can be rectified.

Kindly note that the POA attracts a fee in the embassy as well as here in India. In India you need to affix a Rs 500 stamp paper and get the documents notarized.

Kindly note in case there are any errors / gaps in the POA you waste a lot of time, energy and money because the entire exercise has to be repeated.

For Property Registration

The power of attorney you have executed for the bank can also be used for the registration of the property document. However you need to get the same checked from the developer from whom you are buying property.

All the income and personal documents as per the list have to be self attested by you (signed by you/POA holder) when you despatch the same to India.

Kindly also provide your overseas address proof which can be your employer’s letter in original.

You need to provide following documents attested by Indian Embassy : PAN CARD COPY, PASSPORT COPY and Overseas Residence proof

WHAT TO SUBMIT FOR NRI BALANCE TRANSFER HOME LOAN ?

List of Documents for NRI

  • Photo of Applicant and co-applicant
  • Latest 4 months salary slip
  • Appointment letter
  • Increment letter with salary breakup
  • Address proof
  • Previous work experience letter
  • Pan card copy & Passport copy
  • Processing fees cheque from NRE account
  • Co-applicant photo ID proof and sign Proof ( Pan Card ,Passport, Driving License copy)
  • Employment contract (English copy if the contract is not in English, attested by the Embassy/Employer).
  • Latest work permit.
  • Details of previous employment.
  • Identity card issued by current employer.
  • Bank Account Statement For Salary & Saving a/c (six months).NRI,NRO A/C
  • Pages with visa stamp on the passport.
  • Power of attorney For Bank Format
  • Pan Card Copy, Address proof, Photo for POA holder
  • Detailed credit report from Equifax / Experian

Credit Report

A credit report is a mandatory document for NRI/OCI/PIO US/UK/European countries, Australia, New Zealand and South Africa.

The credit report is not required for professionals working in the Middle East

Please download a detailed credit report which would clearly state your credit score. Most of the times you would have to pay fee to download the credit report. the credit reports available free of cost do not provide detailed credit history and might not provide the score.

WHERE TO PROCESS FOR NRI BALANCE TRANSFER HOME LOAN ?

We would recommend to process with Bank or institution which is providing Online Access to monitor, manage and allow part payments online. Most of the banks provide online access. So make sure you collect all the required online access details at the end of Loan process. We, at Loanyantra as part of process checklist, make sure our customers get the required online access to the loan process.

WHOM TO APPROACH FOR NRI BALANCE TRANSFER HOME LOAN?

NRI/OCI/PIO Loans if not professionally handled it might be very cumbersome job. It is always good to be ready with all the documents before starting the Home Loan process. In case of additional documents required then it would take extra money to send , extra time it would take to receive and extra efforts by the  Power of Attorney(POA) to submit the documents. We would recommend, use services from a prompt loan professional to process it smoothly. Loanyantra.com, India’s first online loan management company, a reliable and perfect source if you are looking for a smooth process.

In a hawk’s eye, Loanyantra provides professional service at free of cost. As our process protocol, we first send entire checklist and have a professional call before we start the process. Once the process starts you get online access on Loanyantra portal which would update the status of the Loan process and it provides a chat facility between you, Loanyantra executive appointed for your process and the Banker. We make over all experience a cake walk.

25 FAQs About Home Loan

  1. What is a home loan and what are the different types of home loan?

When you want to buy a home, you cannot fund the whole property value. So, you go to certain lenders for borrowing the amount at a certain rate of interest, for a particular period to repay in installments. This is termed as home loan. In general, loan taken to buy a home.

There are five types of home loans popular in India.

  • Land Purchase Loan– There are many people who are interested in buying a plot of land and then constructing a house, land purchase loan helps you buy land. Most banks provide 80%-85% of amount but this loan does not shield you from tax.
  • Home Improvement Loan- If you want to renovate the house like painting, plumbing, electrical work etc.  you can opt for this loan.
  • Home Conversion loan – If you have a home but are interested in buying a new house this is your best bet. With this loan, you can transfer the current loan to the new home but this loan is a bit expensive when it comes to interest rate.
  • Home Construction loan – People who are willing to construct their own house can avail this loan. The customer has to submit the entire cost of construction along with application for the bank to review and approve it.
  • Home Purchase Loan – This loan is for those who are willing to buy a new home or flat. Apart from simplifying your home buying dream, this loan also gives you tax benefit under section 80C and Section 24(d) of Income Tax regulations. Banks sanction loan for 80%of the total worth of the property, the remaining 20% which is the down payment has to be paid by the borrower.

2. What is the criteria to be fulfilled to get a home loan?

You need to fulfill the following parameters of the bank in order to get your loan successfully sanctioned:

  • homeloan-questionnaire_loanyantra-comSalary and ITR– Salaried individuals have better prospects of getting their loan approved especially the ones who have higher salary. Also you need to submit ITR to prove your credibility.
  • Age: The minimum age limit prescribed by the banks is 21 years for loan application
  • Credit history or CIBIL rating – Credit rating plays a key role in getting your loan approved by the bank. A strong credit history means better prospect of loan sanctioning.
  • Professional stability – Individuals with a good professional background work experience is considered good and hence has better chances of getting loan. Higher the salary of an individual, the more are the chances for greater eligibility of a loan amount.
  • Property check– Banks and HFCs carry out the property verification to see if the prospective property is ideal as per their defined technical and legal specifications.

3. Who is a home loan nominee?

Nominee is a person who is entitled to become the owner of the property when you are no more. This concept comes into picture when you insure your home loan in case you pass away. The outstanding amount is paid by the insurance provider and your nominee becomes the new owner of the property.

4. Who can be a home loan co-applicant?

A co-applicant is a person who applies for loan along with the borrower. This is done to show as a supplement to the borrower’s income so as to increase the eligibility. Banks and HFCs allow only certain relations to be co-applicants and it includes the following:  

  • Father and Son
  • Unmarried daughter and father
  • Unmarried daughter and mother
  • Brother and brother
  • Husband and wife.

5. What are the benefits of having a co-applicant?


The benefits of having a co-applicant include the following:

  • Increases the probability of loan approvalhome-loan-co-applicant_loanyantra-com
  • Helps you to get bigger loan amount sanctioned
  • Tax benefits to both applicant and co-applicant

6. Who Is A Home Loan Guarantor?

A guarantor is a person who vouches your credibility before bank or HFCs. A guarantor is someone who agrees to pay the debt in case the borrower is not able to do so. Also, banks ask the guarantor to be someone from the family or a good friend. A guarantor has to submit the fowling documents:

  • Income proof in the form of salary slip
  • Property documents
  • PF details

This is done to see the capability of the guarantor whether he/she will be able to repay the home loan in case of default of the principal borrower.

7. Is home loan guarantor and co-applicant same?

Do not confuse home loan guarantor and co-applicant the same. A guarantor’s role is assuring the credibility of the borrower before the home loan provider and to repay the loan in case the borrower goes rouge.

On the other hand, the co-applicant applies for loans along with borrower and reaps the benefit of tax. Presence of co-applicant helps in increasing the home loan eligibility amount whereas this is niot the case iwth a guarantor.

home-loan-questionnaire_loanyantra-com

8. What Is Home Loan Collateral?

Home Loan Collateral is the security against which the banks or HFC will sanction the home loan. It is also known as asset-based lending or secured lending. It protects the home loan provider against home loan defaulters. The property you are willing to buy can also serve as home loan collateral , in case the borrower fail to repay home loan the home loan lender will take the possession of the property.  

9. How much amount is usually sanctioned on the amount of the property as a home loan?

Banks and HFCs usually sanction the loan of 80%-85% of the total cost of the property.

10. On what salary is the home loan eligibility calculated? Gross or net?

Some lenders take the Gross salary into consideration whereas some take net salary. If gross salary is considered, the loan eligibility amount will be comparatively more as the gross salary figure is higher than the net salary’s.

11. What are the different documents required for a home loan?

The following table shows the different documents required by the banks and HFCs from salaried, self-employed and non-professional individuals:

Salaried Customers Self Employed Professionals Self Employed (Non Professional)
Duly signed application form by all applicants with recent photograph. Duly signed application form by all applicants with recent photograph Duly signed application form by all applicants with recent photograph
Age proof, ID proof and residence proof . Age proof, ID proof and residence proof . Age proof, ID proof and residence proof .
PAN card details of all the applicants PAN card details of all the applicants PAN card details of all the applicants
Salary slip of last 3 months Proof of educational qualification and business existence proof Business existence proof
Form 16 / Income Tax Returns Income tax return of last 3 years and computation of income Business profile
Bank statement of last 6 months Balance sheet of last 2years which is certified by CA along with profit and loss account. Income Tax Return of last 3 years along with computation of Income
Balance sheet of last 2yeras which is certified by CA along with profit and loss account.
Processing fee cheque Bank statement of last 6 months Last 6 months bank statements (self and business)
Processing fee cheque Processing fee cheque

12. What are the additional charges for a home loan?

The home loan applicant has to pay the following fees apart from down payment:

  • Processing fee– This is usually a non-refundable amount charged by the banks to process the loan applications. Some banks and HFCs charge a percentage of loan amount while others have flat processing fee.
  • MODT charges or Memorandum of Deposit of Title Deed- This is an acceptance from the borrower that he/she has submitted title documents of property with the bank. Government levies stamp duty on this and the additional-charges_loanyantra-comamount varies from .1%-.2% of the loan amount.
  • Legal verification charge- Once the documents are submitted for loan approval, the banks and HFCs gets the legal verification of the documents done. A team of legal and technical expertise is deployed by the banks. Some financial institution includes this fee in processing fee while other charges it separately.
  • Loan conversion charge– This charge is levied by the bank in cases where you are converting floating interest rate into fixed or vice versa. The conversion rate charged by banks and HFCs usually varies from 0.5% to 1% of outstanding loan amount.
  • Late Payment charges – In case the borrower is not able to repay the home loan EMI on time, the banks may charge a penalty in the form of late payment charges
  • Miscellaneous charges– Banks- service charge, cancellation charges, cheque bounce charges etc. are a few charges levied by bank.

13. Costs Not Approved By Banks as Part of A Home Loan?

Stamp duty charges, registration charges and other documentation charges are not included in the home loan amount.

13. What is the average time taken for the disbursal of the loan amount?

It takes approximately 20-25 days for completion of formalities and loan disbursement.

14. Who are the different types of home loan provider?

There two major home loan providers:

  • Bank (nationalised and private)
  • HFCs (Housing Finance Companies) / NBFCs (Non-Banking Fianance Companies)

15. When can you go for a nationalized bank?

Nationalized banks are more reliable when compared to any other lender. Also the interest rates are lower and the customers can expect an immediate interest rate change when the RBI executes the rate cut. One can opt for national banks only with an understanding that it takes time to get the things done faster.

16. When can you go for an NBFC or a private bank?

Private banks and NBFCs work faster and accessible. Also some NBFCs provide loan for 90% of the property value. If you are in a hurry and need more funding to buy a home, opt for an NNFC or a private bank. But one should be careful while choosing the bank with respect to the interest rate.

17. What is part payment?

Apart from the EMI, if you wish to pay huge amount to the lender to reduce the principal amount, then it is termed as part payment. Usually, the lenders don’t charge on the part payment. Scheduled part payments, quarterly, half-yearly aor annually, can infact, reduce the principal amount and help you in closing the home loan faster.

18. What is prepayment?

Housing Loan prepayment is the full payment of the outstanding loan amount in one single payment so as to close the loan before the scheduled tenure. There are no prepayment charges levied by any of the lenders as per RBI’s rule.

prepayment_loanyantra-com

19. Is prepayment and part payment same?

No. Prepayment refers to paying the whole outstanding amount in order to close the loan earlier than the estimated tenure. Whereas, partpayment refers to apart from paying the EMIs, paying a particular amount to the lender to reduce the outstanding principal amount.

20. What is balance transfer?

It is the transfer of the unpaid principal loan amount to another lender fro different reasons. Usually you transfer your outstanding loan amount to another lender if you are not satisfied with the existing lender with respect to the rules or interest rate. If you have been regularly paying your EMIs banks easily let you avail this facility.

21. Do you know the relation between EMI and tenure of a home loan?

EMI and home loan tenure are inversely related. The longer your home loan tenure, lesser is the EMI and vice versa.

Here is an example to illustrate the same:

For example you have taken a home loan of Rs. 50 lac for a period of 30 years then the EMI paid by you is 43,694 at the interest rate of 9.95% but if this tenure is reduced to 25 years then the EMI shoots to 45,259.

22. What are the different home loan penalties?

Loan Prepayment: In case you are prepaying your home loan, banks might charge up to 2%of total outstanding loan amount. This is only in certain cases say, prepayment after immediate six months of loan disbursal.

Missing EMIs: Missing your EMIs might put you in the list of defaulters and in such cases when you skip 2 or 3 EMIs banks will intimate you about paying the EMIs which if ignored will make you face the legal notice and make you a defaulter. This can make bank initiate possession of your property or might out your property for sale , it can also adversely affect your credit score.

23. What Is Home Loan Foreclosure and what are the factors to be considered?

Home loan foreclosure or prepayment means closing your home loan before the completion of tenure for which you had taken it. In order to foreclose the home loan, you need to consider the total EMIs paid by you , it helps you in estimating the foreclosure amount. You can now check your foreclosure amount by using foreclosure calculator , to do so you need the following information handy with you :

  • Total loan amount
  • Home loan tenure
  • Rate of interest
  • EMIS already paid
  • Foreclosing month- it’s the month in which you want to foreclose your home loan. 

24. What is an amortization schedule?

It is a table which contains all the details of home loan. The table shows the amount borrowed and the period for scheduled payment. It gives you information about the principal amount, outstanding amount, interest rate, tenure, EMI and how the EMI is divided into interest component and principal component. It also includes the tax payments or insurance payments that the borrower makes.  

25. What are probable reasons for home loan application rejection?

There are various reasons for home loan rejection, some of them include:

  • Poor CIBIL rating
  • Insufficient salary or monthly income
  • Low work experienced
  • Too many dependents
  • Unsatisfactory educational qualification
  • Previously rejected home loan
  • Error while filling the application form and unsatisfactory verification
  • Old property
  • Processing fee cheque bounce

 

Why is Your Co-applicant’s Credit Score Important For Your Home Loan?

Most of the prospective home loan customers are left distraught with the loan application rejection by the banks. One of the major reasons for the rejection of home loan application is attributed to bad credit score. If you are taking out a home loan jointly then it is necessary for even the co-applicant to maintain a sound and healthy credit score. Co-applicant can be spouses or business partners who are looking forward to purchase a property by securing a home loan.

Who can be your co-applicant?

A co-applicant can be described as a person who applies along with the borrower in order to secure a loan. It should be noted that a co-applicant can’t be a minor in any case as in legal fashion, a minor can’t be brought under a contract. Most of the banks offer a number of relations which can act as co-applicant when filing for a home loan. This includes parents, husband and wife, parent and son. 

The importance of credit history of co-applicant

Banks always make a detailed check of the credit report of both the borrower and the co-applicant when you apply for a home loan. All the necessary information will be checked thoroughly and decision of whether or not to offer home loan to the prospective customer will be taken. Bank will look into the salary slip, balance sheet and other credit information for both the borrower and co-applicant.

In simple words the credit score helps in determining the customer’s borrowing behavior in a true way. If you have a good and healthy credit score but the co-applicant is a willful defaulter or happens to be late in making payment then it will adversely affect your chances of securing the home loan. Banks always get extremely cautious when they check a lower credit score for lending a home loan. Thereby it is necessary to maintain a strong financial track record of both the co applicant and borrower while applying for a home loan.

Smart steps to establish a good credit history

Establishing a good credit history is quite easier than you think. Just follow the below mentioned simple guidelines and you will be able to secure home loan without much difficulty within a short time.

  • Make sure that the bills are paid in timely fashion as late payments are viewed quite negatively by the loan providers.
  • Keep the balances low and maintain a relatively healthy mix of the credit.
  • Make sure you do not apply for home loan after getting new loan sanctioned recently as this will be viewed as a credit hungry behavior.
  • Make sure even the co-applicant has not taken out a loan recently while applying for a home loan.
  • It is necessary to review the credit history on frequent basis throughout the year.

If the borrower and the co-applicant follow all these simple steps then they will both possess a sound credit score which will boost their chances of getting a home loan approved without much hassle.

What is Re-financing?

Refinancing

If a borrower wants to have a change of the rules/terms or interest rate or payment period of the existing lender, he opts for a new lender. This is called as refinance. In a refinanced loan, the old loan is paid off with the new loan, and the old terms are replaced with new terms.

The concept of Refinance:

Many times when the home loan borrowers get overburdened with the interest rates of the bank, they decide to move to another bank offering better interest rates.

For example last year, RBI had slashed down the rate of interest for home loan borrowers. Banks like HDFC and SBI had slashed the interest rates by .15% in their lending rate but many banks were not willing to offer this leverage to their existing customers; but, the new home loan borrowers can avail this sliced interest rates.

Under such circumstances, the borrower might prefer for a refinance, to enjoy the benefits of the new customer.

The following information will be checked when you apply for refinance:

  • Your credit score and payment history.
  • Your income and employment history.
  • Your assets (stock, retirements and savings accounts).
  • An appraisal to determine the current value of your home.

refinance_loanyantra.com

Types of Refinance

Considering the Indian market scenario, here is the classification of refinancing loans:

  • Rate and Term:  This is the most common type of refinance. Here you can replace the existing loan with a new one with new interest rate, new timeline (optional) and new terms.
  • Cash Out: In case you are willing to mortgage a large amount, then cash out is a good option. With cash-out refinancing, you refinance your mortgage for more than you currently owe, then pocket the difference. Be aware where and how you spend the extra amount.
  • Cash In:  A cash-in refinance is the opposite of a cash-out refinance. When you execute a cash-in refinance, you bring money and pay the new lender and lower the loan amount, either to qualify for the loan or to retire fast from the loan.
  • Short Refinance: . Here your existing bank may agree to pay off(refinance) your existing loan by replacing it with a new one, making it more cost effective for the borrower. But this might hurt your credit score.
  • No-Closing Cost: Here you can get a new loan after paying upfront fees of considerable amount. But make sure that you only pick up this option when your existing interest rate is lower than the present interest rate by at least 1.5%

Factors you should consider before refinancing your home loan :

  • Interest rates – Never ignore this factor while you plan for refinancing your existing home loan. It is advisable that you should search in a number of banks to make a comparative analysis of the interest rates so that you can find out which bank offers the best rates.
  • Processing charge: Getting your loan refinanced from another bank may require the bank to process your application which makes you liable to pay a processing fee which could be between .5% to 1% (depending on the bank you are opting) and hence, we suggest that you should always compare the savings you make while opting another bank. If the saving amount is significant go ahead with refinancing.
  • Tenure of the loan – Tenure and EMI are inversely related to each other, if you want a lesser tenure go for higher EMI and vice versa. Few banks do not agree on reducing the loan tenure, under such situations, no wonder you might opt for a refinance, provided you also have a lesser interest rate when compared to your existing lender’s.
  • Be calculative while planning to refinance. It’s not mandatory that refinance will always reap benefits to you and hence, you need to meticulously calculate the amount you will save while applying for refinancing. Different banks have different exit policies and penalties; some might go up to 4% of loan amount, thus, calculate the amount and then go ahead with refinancing.

Advantages of Refinancing / Reasons for Refinancing :

  • It lowers the monthly payment as you opt for a lower interest rate.
  • It makes it easy for you to plan and pay off your loan if you refinance your new home loan from floating to fixed interest rate, as you have a planned EMI.
  • Consolidation of debts for, there will be a reduced EMI.
  • Change of maturity of the loan. Refinance is the best only if you opt for a lower tenure at a lower interest rate.

Ask yourself before you go for Refinancing : 

Before you contact a refinance lender, make sure refinancing makes sense for you. Ask yourself these questions:

  • Is there a prepayment penalty on my current mortgage?
    Though the RBI had removed the pre-payment charges, the banks and NBFCs still ask for a penalty if the loan amount crosses certain limit. So, find out if you will be charged a “prepayment penalty.” The amount varies, but it can add up to several months’ worth of interest payments. Ask your lender.
  • What are the costs of the new mortgage?
    Lenders almost always charge fees for taking out a new loan. These can add up depending on the size of the loan. The charges could include application fees, insurance fees, plus title search, insurance and legal costs. However, many of these fees are negotiable and are different from lender to lender. Make sure to shop around and compare all associated costs and fees of your refinance.
  • Will my tax savings be reduced?
    If you claim mortgage interest on your tax return, refinancing to a lower rate will mean that you’ll have less mortgage interest to deduct. That means you might have to check with your tax adviser to see if your overall savings will be increased if you refinance.

Our role: Loanyantra is a complete solution guide to the home loans existing in India. We are the first real-time loan monitoring system that work dynamically as the market changes. Our continuous monitoring and market analysis always keep you posted on the latest development and changes in the home loan market and your loan status. Apart from loan management, we work on refinancing and balance transfer as well. Our sole objective is to make sure that all the customers of Loanyantra are able to close their loan easier and faster.  

Know more on how to add a co-borrower while you refinance your home.

How to add a co-borrower when you refinance a home?

Know more about cost of switching home loan from one lender to another

Cost of switching home loans to new lenders?

 

Does a co-applicant help when getting a home loan?

A co-applicant for home loan is someone who applies for a loan with you. Usually it’s a family member, such as a spouse, or a father applying with an unmarried son or daughter. A co-applicant also can be a business partner if both parties will own the property bought with the loan. Having a co-applicant for home loan increases your chances of approval and of getting a low interest rate.

Improved Creditworthiness

Even though your credit score is just a number, lenders place a large emphasis on it because it predicts how likely you would be to default on the loan. If your own credit score is low, or if your co-applicant’s credit score is high, having a co-applicant for home loan makes your application stronger overall and increases your chances of approval.

co-applicant for home loan _loanyantra.com

Lower Interest Rate

Even if you’d be likely to be approved on your own merits, a co-applicant can help you get a lower interest rate on the mortgage. Lenders reserve the lowest interest rates for loans that pose the smallest risk of default. By adding another creditworthy borrower to your application, you lower the bank’s risk. The bank might reward you with a lower interest rate than you’d pay when you were the only one applying for the loan.

Higher Income

A co-applicant’s income is included when determining how much of a loan the bank thinks you can afford. Adding a co-applicant might mean that the person’s income is added to yours when the bank considers how much to lend you. For example, say the bank doesn’t want payments to exceed 25 percent of your monthly income. If you have a monthly income of Rs.40,000, your maximum monthly payment is Rs.10,000. But if your spouse brings home another Rs.40,000 per month and becomes a co-applicant, your maximum monthly payment goes up to Rs.20,000.

Legal Requirements

In some cases a co-applicant is required on loans, so applying without one means you’d automatically be denied. Typically, if you’re applying for a secured loan, any co-owner of the property must be a co-applicant. For example,  Similarly, if you and a business partner are buying a store, you both must apply together for a mortgage.

How to add a co-borrower when you refinance a home?

Refinancing is a way to create a new mortgage loan and lower your interest rate and house payment. When refinancing a mortgage, your lender reassesses your income and debt. Any change to your financial situation, such as a decrease in income, an increase in debt or a lower credit score, can affect your ability to refinance. If you fear that a lender will deny your refinancing application, you can add a co-borrower to the new mortgage. This can include anyone but typically would include a family member such as a spouse, parent or sibling.

Step 1

Ask your preferred co-borrower if she is willing to put her name on the refinance application. Make sure she understands that she is responsible for ensuring the loan payments are made on time and in full, or her credit score will suffer.

Adding a co-borrower to refinance _Loanyantra

Step 2

Check your credit report as well as your co-borrower’s report to see whether you qualify for a refinance.  You can also get your credit score from CIBIL. Know more –  http://loanyantra.com/blog/how-is-your-cibil-score-calculated/

Step 3

Contact your existing lender or a new lender to get an application to refinance the home loan. When you fill out the application you will be asked to include your information and the co-borrower’s information. This includes both names, telephone numbers and Social Security numbers. Be sure both of you sign the mortgage refinance application.

Step 4

Submit the application along with other information the lender requests. This typically includes copies of your tax returns, bank statements and recent paycheck stubs. Since you’re applying for a refinance with a co-borrower, the lender will take both incomes and employment records into consideration.

Step 5

Wait for the lender to make his decision. If he approves the loan, you and the co-borrower will need to attend the loan closing and sign the mortgage papers. If the lender approves the refinancing and adds the co-borrower to the home loan, both parties must attend the loan closing. You’re both equally responsible for the loan, and closing on the loan is dependent on both signatures on the mortgage agreement. The new mortgage replaces the old loan.