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While granting a home loan, lenders generally ask the applicants to submit a copy of their bank’s account statement, for six months to a few years. These are very important documents from the lender’s perspective, for determining the applicant’s home loan eligibility. Here’s what the lenders look for, in a bank account statement.
1. The existence of any loan being serviced
From the bank statements, the lender can easily find out the existence of any loan(s) being serviced, in case identical amounts are debited at regular intervals. The existence of any such loan, will help the lender in deciding your loan eligibility amount. An existing loan, will reduce your overall home loan eligibility.
2. The level and nature of activity
For self-employed persons, the lender asks for bank statements of the account, where the business or professional income is credited. These statements, will help the lender in verifying the level of business activity like sales/receipts and compare it, with the one declared in the income tax returns or in the loan application form.
It will also help the lender to identify huge cash deposits or withdrawals. Huge cash deposits in the account, will create doubt, unless the nature of the business warrants such deposits.
For salaried people, bank statements enable the lender to verify that the salary purported to be shown in the income tax return, is in fact credited in the bank account. In case the salary is credited month after month and the amount is also similar, it points to the salary being genuine. In case the amount of salary, as shown in the income tax return, is not credited month after month in the bank statement, it is sufficient for the lender to view such credits with suspicion.
3. Inward and outward cheque returns
Bank charges that are debited for bounced cheques or those that are returned unpaid, help the lender to know the volume of cheques returned, which are either deposited in your account or are issued by you. The volume and value of the cheques deposited or returned, will point towards the profile of the customer, his financial discipline and the strength of his business.
Isolated cases of cheque returns, will not impact your chances of getting a loan. However, repeated instances of cheque returns, could impact your chances of getting a loan, because the lender will tend to avoid a person who issues cheques, without ensuring that adequate balance in maintained in the bank account.
4. Account balance and nature of debits
The balance amount in your bank account, reflects your financial health, as well your saving habits. Regular debits (for example, in a Systematic Investment Plan) in mutual funds, will show your financial discipline and good saving habits.
There is a growing trend of using credit cards or internet banking, for making payments for online purchases. The quantum of credit card payments or debits for online payments, will help the prospective lender to understand your spending habits and pattern. This will help the lender, in determining your loan eligibility in relation to your income. Higher payments or debits in your bank account, are likely to reduce your overall loan eligibility.
(The author is a tax and investment expert, with 35 years’ experience)