Beware Of These Frauds While Applying For Home Loan

When we begin speaking of the shortcomings in India, financial fraud maintains an intermediate ranking. In March 2021, lending institutions reported approximately 45,000 cases of monetary fraud, where the loan amount summed at INR 5 lakh crores. The pandemic has even escalated the situation, and there has been an increase in these home loan scams.

What Is Leasehold Propverty?

Leasehold property means a property that is being given for use to another individual for a stipulated period. The individual leasing the property is called the lessee, while the person who owns the property is the lessor. To develop real estate projects, many builders lease the land.

Fraudsters are making headlines for all the wrong reasons as they use tricks to obtain home and mortgage loans from banks or financial institute. Since the demand for home loan in India is increasing day by day, and also home loan fraud is also seeing a steep rise. Fraud situations have become extremely common, so it is crucial to beware of the air of fraud brewing around. This article will dive into the metrics of how you can beware of such home loan fraud.

Beware Of Frauds While Taking A Home Loan

The easiest way to define home loan fraud is by intercepting the trickery conducted in multiple forms, such as facts, information, and numbers. Thus, it is a simple lending tactic adopted by fraudsters where they target borrowers to extract money.

Borrowers and financial institutions can commit home or mortgage fraud. These frauds are often committed by a group of investors who skim their way through properties on sale.

Home Loan Fraud Areas

The two primary home loan fraud areas include:

1. Home Fraud

Home fraud is illegal and falls under the category where a borrower takes inappropriate measures to possess property.

For example, the borrower may present erroneous income statements and other details on the loan application. Alternatively, the borrower can also influence the appraiser to play around with the property's appraised value.

2. Profit Fraud

Industry insiders are the biggest culprits of home loan fraud and majorly do it to make more profit. Industry insiders have the privilege of executing the fraud. Many investigations have shown that a significant amount of home loan fraud involves attorneys, mortgage lenders, industry experts, etc.

Profit fraud uses the mortgage principle to seize equity and cash from homeowners.

How To Stay Safe From Home Loan Scams?

How can you stay safe from home loan scams? Here is what you should look out for:

1. Advance Fees

The only way to look for red flags is when you are compelled to pay a charge before your mortgage is accepted. Once the mortgage application is through, a lender can request a loan processing charge.

3. Misleading advertisements

A home loan can be granted only by authorized lenders. The lenders go through your CIBIL score to gather your eligibility and can only proceed for loan approval. Once the approval process is through, other checks in the due process will guarantee a gap-free residual. Any reputable lender will be honest about the paperwork and devote the time and effort needed to explain the tidbit of the documentation instead of rushing through it. Therefore, if you find any advertisement ensuring quick disbursement without documentation, consider it a red flag and take a step back.

Basic Caution When Applying for Home Loan

Below are some pointers you must consider as a caution before applying for a home loan.

• Regardless of how minimum the loan amount is, always collect a physical copy that contains all the details about the repayment.
• When applying for a home loan, make sure you read all terms and conditions associated with the transaction thoroughly.
• OTPs are an extreme source of destruction. However, one thing to keep in mind concerning OTP is how they are needed for funds transfer rather than for receiving any funds. Fraudsters request OTP, which they further use to transfer funds.
• Do not share Passwords, OTPs and Transaction PINs with anyone.

How to Report a Fraud Loan?

In extreme cases, when you fall into a home loan scam trap, visit your nearest NBFC branch where the amount has been deducted. Moreover, make sure to file a complaint too. Once a complaint or FIR is filed, the investigation is taken seriously.

Additionally, inform the credit agency about the issue too.

Conclusion

Over the years, since the number of people who opt for a home loan is increasing, the rate of fraud cases is automatically growing in the process. Therefore, when applying for a home loan, be attentive to all the details. SMFG Grihashakti provides home loans up to INR 5 crores* for properties under construction or resale. The best part about these loans is the enticing interest rates and flexible repayment tenure, which can stretch to 30 years.

With SMFG Grihashakti, you can be assured of safe, secure, and private transactions. We protect our customers and their rights and place their money above all other priorities.