Real Estate is probably the most lucrative investment you ever make. But for most of us it is not possible to make the entire payment of the house upfront. In such situation, applying for home loan is a good option. Although the norms for getting home loan have eased in the recent times, don’t expect it to be a easy task. One small mistake can result in rejection of your home loan application.
To ease your tension, here we have listed few important points that you should keep in mind to save your home loan application from being rejected:
1. Bad Or Low Credit Score
Credit Score reflects a person’s attitude towards the financial transactions. So, if a lender has defaulted or deferred the payment on any kind of loan, it will have a bad impression on the credit score. Also, standing as a guarantor to a defaulter may lead to rejection.
Some famous Credit rating agencies like Credit Information Bureau (India) Limited (CIBIL) assign credit scores to individuals. To check you credit history and financial habits, Banks contact these agencies to seek a copy of your credit report. They also check about the existing loans on you and the trends of their payment. To maintain an acceptable credit score, you should pay all your dues on time.
2. Mention Correct Personal Details
Before submitting you home loan application, you should make sure that the personal details in your credit report and those in your application form do not mismatch. This will result in rejection of your home loan application. If there is any change in your personal detail, you must inform your lender. By paying nominal fee, you can check your own credit report from the agencies.
Important documents required while applying for home loan–
Past 3 months salary slip
Bask account statement for the past six months
Processing fee cheque in favour of the bank
3. New Or Unstable Job
If you are a salaried class people, your monthly income flow is determined by the stability of job. In such case, if you change your job frequently, it gives a negative impact about your history. So if you are planning to buy a home in coming years, avoid changing your job. In fact, the financial record of your employer firm is also considered as a measure of your financial stability.
4. Age Factor
Age is the most important factor considered by the lender while disbursing a loan. The age bracket for applying home loan is 21-65 years. So, before applying for home loan, make sure that you fall in this age bracket. Being a little thoughtful will help you avoid the rejection of your home loan.
5. Property Value and Title
After considering other factors, banks value the property themselves and grant a loan upto 80% of the property’s value. So before finalizing any property deal make sure that the property you are buying is similar to the market price not overpriced. Additionally, if your property does not have a clear, or any issues connected to the approvals from the authorities in this case bank may reject your home loan application.
6. Rejection by other banks
In curiosity and hastiness, some people apply to multiple banks. But, remember that if your loan is rejected by other bank, this will also laid negative impact on your credit score. It is better to wait for the bank’s reply to know the reason or fault as to why the loan is rejected and what you can do to correct the same. To know more options you can analyse your credit score that will help you to take the right step.
7. Location of the property
In the current scenario, Banks also make their decision to disburse loans on the basis of the location of the property. Let’s take the case of properties in Noida Extension, where many projects were stalled due to lack of clearance and acquisition disputes in 2011. As a result, banks were quite averse about funding the property purchase in these areas.
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