5 Mistakes Doctors Should Avoid When Opting for Physician Loans
The National Health Profile, 2018, published by the Central Bureau of Health Intelligence, says that there are around 1 lakh registered allopathic doctors in India. That puts the doctor-citizen ratio to 1:1,000.
Doctors in this country treat some of the most fatal diseases like:
- Stroke
- Diarrhoea
- COPD
- Tuberculosis
- Neonatal disorders
- Ischemic heart disease
- Lower respiratory infect
- Diabetes, and more.
They tend to attend to long queues of patients for almost 12 hours a day; some even more for longer hours.
NBFCs provide physician loans specifically for such individuals almost as a token of appreciation for all their hard work. These loans can help doctors in various ways; for example, to go on an exotic vacation.
Personal loans, business loans, home loans, and loans against property are some of the different customized loans for doctors that these financial institutions offer. These loans are customized for doctors and provide the required financial assistance.
However, doctors need to avoid a few mistakes when they apply for these loans. Doing so will help them avoid rejection of their loan application.
5 mistakes that doctors should avoid when opting for a loan –
- Applying for an unreasonable amount
Your loan application might get rejected if you apply for an amount which the lender finds absurd.
Hence, you must use a loan eligibility calculator first. Providing a few numbers like your existing loans, income, net profit, etc. will give you the loan amount as per your eligibility.
Also, you can use a loan EMI calculator to calculate the EMIs you will pay on your loan. You have to provide the principal and tenor to find the same. This calculator will also help you determine the tenor you should go for.
Selecting the right tenor is crucial as your EMIs and total interest payable will depend on it.
- Not providing all the documents
Another reason your application for physician loans might face rejection is when you don’t provide the necessary documents.
For example, your qualification certificate, identity proof (PAN, Aadhaar, Voter ID, Passport, Driving License, etc.), address proof (house rent agreement, latest utility bill, etc.) and bank account statement are mandatory to apply for any of the loans.
Also, you have to provide salary slips of the previous 3 months if you are salaried. Similarly, financial institutions will need income tax returns on your last year if you are self-employed.
You will need to provide documents of the asset you are mortgaging when you apply for a secured loan (loans against property and home loans).
- Not satisfying all the physician loans eligibility criteria
Lenders need you to have the following post-qualification experience to apply for a physician loan:
Secured loans (home loans and loans against property) –
- Dentists – 5 years.
- Graduate doctors – 3 years.
- Ayurveda and Homeopathic doctors – 6 years.
- Super specialist doctors – 3 years.
Unsecured loans (personal loans and business loans) –
- Dentists – 5 years.
- Graduate doctors – 2 years.
- Ayurveda and Homeopathic doctors – 6 years.
- Super specialist doctors – Automatically eligible.
- Applying with a low credit score
A credit score of 750 or more is mandatory when you opt for an unsecured loan. Applying with a low CIBIL score is another reason a lender might deny your physician loans application.
Hence, you as a doctor need to know ways to increase your CIBIL score. However, doing so is not a complicated task – a simple credit card can help you do so. Your credit score will improve if you pay the total payable amount in time and utilize only 30% of your credit limit.
- Applying with a high FOIR
Fixed Obligations to Income Ratio (FOIR) is the ratio between your monthly income and debt. The ratio must not be above 50%.
Closing your existing loans and clearing your credit card balance is an ideal way to do so. Applying with a low FOIR is one of the best ways to get your loan application accepted.
Make sure to avoid all these mistakes when you apply for physician loans. Also, check the additional fees and charges on the doctor loan as per the lender before doing so.
