Home Loan Rejection: Reasons your Bank may not tell you
Home Loan Rejection: Reasons your Bank may not tell you
Taking a home loan is one of the crucial financial decisions, which must be taken with extreme care and thought process. Applying for a home loan involves taking all important considerations at one page and then making a decision based on the derived conclusion.
With lots of research, and decision making, collecting relevant required documents, the Home Loan is never an easy task. This particular aspect, when gets tougher considering the huge responsibility, you will be having after getting a home loan; a responsibility that needs to carry on for another 15 years or 20 years, without failing. Thus, a proper research, discussion with your family member and considering all important aspects, the final call to the home loan must be taken.
Every applicant for a home loan dreams of owning a home with the financial support of the banks and NBFCs. The home application serves this purpose, but how many of them get successful in getting the home loans, and how many of those see their dream for their own home, shattered because of unsuccessful home loan application. Thus, to make sure you never get into such a stage, where you see your dream home not converted into a reality, here we elaborate all possible reasons, for a home loan rejection. Understanding, all possible causes for a home loan rejection and getting prepared in advance, will be a better way to proceed for your home loan application.
Age of Applicant
Among such a huge list of reasons, for your home rejection, the age of applicants is one such. If the borrowers’ age is close to the retirement age, the banks and other lending agencies hesitate to offer a home loan over the unsure repayment option because of retirement age and also for the increased health risk. So, availing a Home Loan for the longer duration have les chances to get an approval, while the short term home loan application can be successful in such cases. Thus, the age of Applicants plays an important role in the rejection of a home loan.
Address on Defaulter’s List
A very precarious condition where you are not at fault and still you are the sufferer; in some cases, it happens that you moved to an address, where the previous person who was living, defaulted on a loan! In such cases, most often the banks default the person and the address, both and list the address in the defaulters database, thus resulting in your Home Loan Application rejected! With no fault of yours, you have to suffer from such an issue and need to personally visit the relationship manager to sort out the issue.
Are you a job hopper? If yes, forget the Home Loan Approval. And why only the home loan, you need to forget many other loan types, as consistently switching job creates a lack of confidence among the bank’s representatives over your repayment capability. It has been seen that many banks require a person to have a stable job; cases, where a job requirement of at least 2 years, and working with the same employer for at least 1 year is recommended!
Are you aware of your unpaid dues and bills, waiting for your clearance? In some cases, whatever the reasons, they might be; either due to the lack of money or due to the lack of careful attitude, you don’t clear your pending dues and bills of a credit card, which can come back to haunt you in the form of home loan application rejection. Unpaid Dues are one of the important reasons for a home loan application.
If you are already having an existing loan, your actual repayment capability is calculated by subtracting the repayment responsibilities from your Income. Thus, if as per the entire calculation, your income is not adequate enough to cover the EMIs of the home loan, it may result in the disapproval of your home loan application.
Loan guarantor to a default loan
Have you ever been a guarantor to someone else? If yes, are you aware that the loan has been completely repaid by that person? The scenario is that, if the person has defaulted on that loan (on which you were a guarantor), it may result in the declining of your home loan application, as you are the one who hold the responsibility of repayment of that particular loan, if the other person has not paid back the loan amount.
Low CIBIL Score
Low CIBIL Score is one of the most crucial aspects in most loans. If the person has an inadequate credit history, the absence of CIBIL Score can pose a serious issue, in the approval of the Home Loan Application. While, a low CIBIL Score is an indication of your low credibility, the chances gets low with the lesser CIBIL Score. A low CIBIL Score is a clear indication that either you defaulted on the Loan in the past, or you didn’t pay the credit card bills and other dues, well on time.
Sudden application for several loans
If all of a sudden you have applied for several loans, in a short duration, it creates a sense of uncertainty over your activities and the banks may opt to play safe in the case of your home loan and may reject it blatantly.
Previously Rejection Applications
Did you know a fact that CIBIL keep a record of all your financial activities? It keeps incidents like defaulting in loans, late payment of dues, missing out EMIs and even your rejection of loan applications. All these incidents become a part of your CIBIL Score and get highlighted in our report. Thus, the previously rejected applications can also result in the rejection of this particular Home Loan Application, too!
Absence of ITR
Don’t you take ITR seriously? If not, now is the time, you have to suffer! You must remember that you need to have at least 2 years of filed in ITR Form, the absence of which can result in the declining of your Home Loan Applicant form. So, if you haven’t taken ITRs Seriously, it’s the time you should take it with an immediate and serious effect.
Lack of Relevant Documents
There is a huge list of documents needed, for the Home Loan Application approval. The documents pertaining to your income, your details, the details of your property, and all relevant documents are needed for the smooth processing of your home loan application. In case, even if there’s a single document missing and you show incapability to show documents as required by the bank or the lending agency, it might result in the home loan application rejection.
Property no suitable
There are conditions, when the chosen property might not stand out on the banks’ policy and it may result in the further declining of your loan application for homes. There are several issues, when we talk about the property; the issue related with the title deeds of the property, the issue regarding the location of the property, or the issue regarding the age of the property (which as per some banks, must not be more than 20 years old), the issue regarding the reputation of the builder, are just some of the common reasons, for which the home loans can be rejected under the ‘property no suitable’ section.
Valuation not best
You and seller might have negotiated over the final pricing of the property and have concluded a deal. But, what about the one, who have to shell out the money in your place, the lending bank? Consider a scenario, when you have concluded with your seller over the property price at 50 lacs, and if the bank evaluates it at just 30 lacs? The banks have their own circle rate of the places, and as per evaluation, they might recover the amount, in case of any default on the home loan. In such case, the bank may opt to reject the home loan application, citing the reason ‘Valuation not Best’ to the applicant.
Signature mismatch is just another minor issue, over the rejection of your home loan application. Can you really imagine what a small signature mismatch can do! The entire loan application might get rejected!
No response from your side
Take a scenario, when you are ultra busy and have no time in picking up the calls of anyone, even if it’s from the banks for the verification purpose. There are people who got their Home Loan Application rejected simply because they could answer the verification calls of the banks!
Minor having a right on the property
If any minor I holding any right over the property, it might also be a reason for the disapproval of your home loan application. If the seller fails to furnish this information to you, your Home Loan Application results in disapproval!
No secure future of yours
You are a job hopper! You are not mentally stable with regard to your income sources. Sometimes, you tend to start your own firm, the next day, you switch to a 9 to 5 job! Even, if you have started a business of your own, and have applied for the home loan, you may see your home loan application as being rejected. The person who doesn’t have the secure future and on whom the banks can’t rely on the repayment, the banks consider better rejecting the application for Home Loans.
Absence of NOC for Previous Loans
Even, if you have paid all remaining dues and closed out loans of your past, do you have all valid documents? There are chances that the bank may demand NOC for your previously closed loan and failure to furnish those can result in the disapproval of your Home Loan Application!
If you are carrying some other loans, your repayment capability will be calculated considering those factors, of course. If you are being found out incapable to make a repayment for the new loan (a home loan, in this case), your home loan may gets rejected.
Mismatch between Income and CIBIL Score
It’s not a guarantee that scoring well enough in CIBIL will get you a home loan approval. There are chances that the CIBIL Score might not be highlighting exactly what the reality is. Considering a scenario, where your income is too low and still your CIBIL Score highlights the overall ratings, being very high, there are chances that your home loan might get declined. You must remember a fact that your Income is never highlighted in your CIBIL Score and while calculating the CIBIL Score, your income is never considered!
This is just other reason, where you not being at any fault, still have to suffer! You must know a fact that all home loan providers maintain a list of negative companies, thus if you are working in a particular firm, which is in the list of negative list of that particular lender, you might end up in getting rejected for your Home Loan Application. Thus, it’s not every time; you are the reason, for the disapproval of your home loan application.
You might be dreaming of having a home of your own, you might end up with the dreams getting shattered. The article highlights all possible reasons, where things may not end up getting in your favor. There are conditions, when bank might not bother you to explain the actual reasons for your home loan application rejection. You may end up wondering what leads to your home loan application rejection. While, some reasons can be explained by the banks, there might be some, which banks may not tell you!
So, getting ready before applying for a home loan application is the best thing you can do, to avoid your home loan application getting rejected! Weigh up all the prospects of the compulsory requirements for the home loan and proceed cautiously in your Home Loan Application!