If you are planning to apply for a home loan, the bank statement must be in your check list of the documents required for a home loan. Why bank statement is required for a home loan? How significant is your Bank Statement and what information lender intend to extract out of it? Below are the facts that lenders look for while inspecting your bank statement:
With the Bank charges debited to you account on account of cheque dishonouring enables the lender to access your financial discipline. In case of higher instances of cheque dishonour, the same projects your incapacity to pay off your liability and affects your credibility. A person who issues cheques without maintaining an adequate balance in his account thus resulting in more number of cheque dishonours has slim chances of getting a loan. Hence, bank statement is required for a home loan.
Information Regarding Other Loan – if any
With the existence of any other loan, your scope of getting higher amount of next loan gets diminished. In case the constant amount is debited from your account every month, that show your liability towards other loan(s) and the lender assessed your capacity of repaying the current loan by accessing your total liability minus the amount you are liable to pay for the previous loan.
Balance of your Account
With the trend of payments via credit cards and online transactions, the lender is able to calculate your expenditure vs. income as all such transactions get reflected in your bank statement. The one will high amount of debits on account of such expenses compared to their income, have fairly low chances of securing a home loan as this reflects your habits of over spending and your incapacity to repay loans in near future.
The Nature of Activity
Lastly, bank statement is required for a home loan because it plays a crucial role in verifying the level of activities of a business in case of self employed and the salary quoted against the amount mentions in loan application. If there is a huge inflow of funds around the time when the loan is applied for, it arises a suspicion that the same activity is being with a view to obtain an eligibility of loan.
In case of genuine salaried employee, a constant amount gets credited as income every month and gets reflected in the bank statement. But in case if the amount has a significant variations, then the same get scrutinized by the lender before lending a loan. Similarly, in the case of self-employed, receipts reflected in the bank statement are compared with the amount declares in income tax returns to access the credibility of the borrower.
So, by now you must be aware of why bank statement is required for a home loan. Now, if you are applying for a home loan, ensure your bank statement is free from the flaws as mentioned above else chances of rejection of your home loan will get substantially high.