Lenders include COVID-19 query to clear home loan applications

Lenders include COVID-19 query to clear home loan applications

Due to the ongoing COVID-19 pandemic, where every individual is experiencing job loss, severe pay cuts, and huge losses in their usual businesses. In the wake of such a situation, some banks and financial institutions have started seeking details related to possible layoffs and pay cuts in the organizations where the personal and home loan applicants work. The purpose of gathering all the crucial details is to know about how they are getting affected by this and what is their current financial condition, if they are applying for any kind of loans during such times, such as personal loans, home loans, or a loan against property

Asking these details from the people will help the lenders to gauge their repayment capabilities to service their loan. This will further ensure the lenders about the applicant’s chances of default if any.

You might be having such queries revolving in your mind if you are about to file your application for any of the credit products. To avoid this confusion, banks have now added a new column in their loan application form to ease out the process.

Let us have a look at what some of the banks and NBFCs have implemented in their organization to help their customers while applying for loans with them.

Firstly, we will talk about a very popular NBFC which is into housing i.e. LIC Housing Finance Limited. Its officials have asked the applicants about the layoffs, pay cuts, and losses in their business due to the coronavirus outbreak before accepting their loan applications. The applicants were supposed to answer such questions, even when they were not affected and were having normal cashflow from their operation during such tough times.

Then comes the Apex Bank of India i.e. State Bank of India, their motive was to know about the status of the company where the applicants are working vigorously. Besides this, they were also tracking how financially sound the applicant is to repay his/her loan even when they are not laid off and have not incurred any huge losses in their usual businesses.

While some of the bank officials have asked the applicants whether they want to apply for a moratorium or not. It has come out that at least 20 percent to 25 percent have opted for RBI’s moratorium and deferment of the Equated Monthly Installments (EMI). Because of the hardship faced by the borrowers, the RBI had issued a circular on March 27 announcing a moratorium on EMIs for three months which got extended later on till August in respect of term loans including, personal loans and crop loans.

As per the officials from the LIC Housing Finance Limited, at least 20 percent of borrowers have opted for this moratorium facility. They further told that this is for the very first time they have seen so many peoples are opting for a moratorium facility on their loans. Most of the individuals who have opted for this are businessmen.

Bottom Line

Including the COVID-19 query on the loan application by the banks and other financial institutions has helped them to better understand the financial status of the applicants. Moreover, they will get to know about the hardship faced by the individuals due to the worldwide lockdown and how it is affecting their current finances and their ability to repay loans.

BookMyMoney is there to assist you during such a pandemic crisis. You can easily apply for personal loans, home loans, or a loan against property with us. You can also compare, and cross-check offers from multiple financial institutions under a single roof.  

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