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What is the bearing of the Reputation of my Employer on obtaining a Home Loan?

While taking a home loan, it’s not just your credentials that are put under the scanner by the bank or financial institution that is giving you the loan. The reputation of your employer makes a difference too. Here are some helpful pointers to help you figure how your employer’s credentials and its relationship with a bank can give you greater negotiation power:

Here’s how you can get a loan on better terms and conditions:

  • All banks have working relationships with domestic companies as well as MNCs. On the basis of their relationship (the quantum of business they do or have done in the past with them) these corporates are classified into different categories- Category A, B and C
  • If you are an employee of any of such companies, it makes sense to check with your bank whether it makes you eligible for a preferential rate of interest. You may be eligible for an interest rate that is at least 0.25% to 0.5% cheaper than its customary lending rate. You may also get a waiver on some charges such as processing fee or any other administrative charges
  • You may even be eligible for a higher amount of loan or if you are a new recruit in a reputed company, the bank may agree to give you a step up loan, one in which your EMI increases with your salary hikes and position in the company

Take for instance the case of 30 year old Anubhav Singh, who is an employee of one of the best known construction companies in India (let’s assume that the name of his company is G). Though he has barely been in the job for two years, his achievements have been appreciated by his employer and has already received an award for outstanding performance in 2013. When Anubhav told his boss that he was planning to apply for a home loan in 2014, and had a private sector lender in mind his boss directed him to a well-known public sector lender (Bank ABC) which is one of the primary lenders’ to the company G.

On hearing that Anubhav was an employee of company G, Bank ABC was more than happy to entertain him and treated him as a privilege customer. The fact that he had a solid reputation to show for and a high CIBIL score made him even more “loan attractive” to the bank. Bank ABC told him that he was eligible for a higher loan amount than the amount that he had in mind and would also get a 0.25% concession on the interest rates, because his company had an existing relationship with Bank ABC.

Anubhav however, was not too pleased because the EMI was working out to be much higher than what he had budgeted for. Barely a couple of years old in his company and an upcoming marriage in 2015, he did not want to take on a large EMI burden. Bank ABC therefore gave Anubhav the offer of availing of a step up loan that would be easy on his pocket in the first few years and would be raised as he moved higher up in his career. Although this means a slightly higher outflow towards the interest component in the initial years, Anubhav was quite pleased with the customized offer that Bank ABC offered him. He has recently received a sanction on his home loan and is now ready to purchase the home of his dreams that he and his fiancée intend to do up before their wedding in early 2015.

If you too are an employee of a reputed corporate firm like Anubhav, make sure you check with your company if it has any existing corporate tie ups with lenders that make you eligible for similar concessions.