I work for Satyam: Will I get a home loan?

Getting a home loan is not as easy as it used to be a few years back. The culprits: the sub prime crisis and economic slowdown. And if that was not enough, company failure also made it's way to this list. Where does this leave genuine borrowers? Let's check.

I have been working with Satyam since last three years. Will banks grant me a home loan?

-- Rajesh* (name changed on request)

Your loan application is processed based on the details and documents provided at the time of applying for a loan. Banks evaluate your repaying capacity based on all this information and make a decision regarding sanctioning your loan amount.

Criteria such as your age, your monthly income, securities and assets you hold, other debt liabilities, your employment status, etc are evaluated before sanctioning a loan. Of all the criteria involved, employment status is a very critical aspect for the banks as repayment of the loan is essentially dependent on this single factor.

Evaluating employment status

Banks usually rank companies according to the rate of default they have seen on earlier loans granted to employees of a particular company. Those companies whose employees have previously shown a low rate of default will be given better interest rates. The reverse could also be true.

In that respect, employees of companies who suddenly face a financial crisis, or are under the scanner for money scam are immediately placed in the possible high default category as they are likely to default given the circumstances. Banks do this as a precautionary measure.

However, despite this you might get a loan offer, provided other aspects of your credit profile are very strong. Banks might take a longer time to process your loan due to stringent verification processes in this case.

Credit profile and CIBIL

Banks, financial institutions, state financial corporations, non-banking financial companies, housing finance companies and credit card companies are members of Credit Information Bureau (India) Limited.

CIBIL gathers all existing consumer credit information and pool it in a one point source for reference. That is, CIBIL can track the accounts you have in several banks. According to your track record, you are given a credit score.

Evaluating an individual's credit profile

The bank will run a check on your dues and your repayment track record through your credit report from CIBIL. Your bank statements and other securities will also be assessed to judge your credit worth.

Tip: It is good to bide time

Property prices are expected to fall and interest rates too.

So, it would be best to hold off for a while longer till the situation at your workplace stabilises. By which time the property prices and lending rates will also decrease further.

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