Seeking home loan? If yes, then you must also be wondering why a private home loan lender such as a financial institution/bank emphasis to have a look at the bank statement. Obviously, lending money that too in lakhs is not a joke thus the lender has all rights to check and recheck the necessary documents before sanctioning the home loan amount. But, many of the aspiring homeowners try to convince the lender that he/she will pay back in time. But, there is more than that which a lender is required to check. So, go through this blog post and know why a lender asks you for the bank statement:
To Check Existence of Loan Borrower
There are some people who try to forge documents in order to get a handsome amount from the bank/financial institution/lender to earn a livelihood. Thus, lending money without checking if the person has an established address or residence in the city/town can lead to loss of the bank/lender/financial institution. Thus, the lender asks to produce a minimum of six months and maximum of one-year bank statement to check if the person has moved to any other location or is a citizen of the present address from at least a year’s time.
To Check if the Borrower have an Ongoing Loan
The deduction or debit of a particular amount each month from a person’s account means that this is a specific EMI which he/she pays for the loan availed. In this case, the lender decides about how much loan amount should be sanctioned to the borrower as he/she is already paying a loan taken for other work/reason. Also, this ensures that a person is not applying for home loan twice in order to achieve his/her dream of owning a home.
The Examine Nature and Limit of Activity
This point consists of two points which include salaried people and the businessmen. So, here let us first understand the case of a salaried person. In this case, a borrower first produces his/her Income Tax return in which he/she states the income earned annually means yearly. The lender then asks for a bank statement where the authority is required to tally the salary amount with that of the IT return. After this, the loan lending authority that is bank/financial institution checks if the same amount is credited into the account of the applicant or not. All is fine if the same amount is duly credited into the person’s account. But, the difference in the amount declared in Income tax return or untimely credit of salary amount to the applicant’s account is enough to raise a doubt in the mind of a home loan lender.
Second is the case of businessmen, where he/she is required to produce the bank statements in order to prove how much income is earned from the business. Similarly, this amount is then matched with the Income-tax return filed by the respective person and any difference in these two amounts can make the authority feel suspicious about the applicant. Also, the bank statement is asked by the lender in order to match the details of sale/purchase receipts with that of the account transactions.
Inward/Outward Cheques Return
The lender gets to know about your financial condition by having a look at the bank statement in which the Bank charges are debited in regard to the bounced cheques or the returned cheques. This also lets the home loan lender know about the number of cheques returned from your account or cheques returned which you issued for others. The total value of these cheques reflects the profile financial condition and status of the applicant’s business.
Account balance that Talk About your Financial Condition
This is the last reason why every home loan lender takes a look at your bank statement. The continuous payment cycle for a handsome amount of money leaves a bad impact on the lender as he/she gives sanctioning of home loan a second thought as the applicant is already paying off several bills. On the other hand, a routine saving in the account makes the applicant eligible for the home loan in quick succession.
With the rise in usage of plastic money/credit card, many people spend a huge amount of money as they feel less worried about paying the bills after a month’s time. This is definitely a relaxing thing but the imbalance between income earned and expenditure incurred can deprive you off the home loan from bank/financial institution.