A home is one of the greater investments in life. As such, a good amount of research, planning, and decision-making go into applying for a home loan. Being thoroughly aware and prepared helps in saving both time and efforts. Often, when we are unaware of certain vital criteria and formalities, we fail to fulfil them. The result? Home loan application rejection.
Have you been applying for home loans, only to be denied approval? Here are the top reasons for home loan application rejection to help you become loan ready for the future –
Age at the Time of Application
Generally, home loans are long-term commitments, taken for a tenure of 10+ years, with the maximum being 30 years. This means that lenders expect the applicant to be around the age of retirement at the time of loan maturity. Hence, elderly home loan applicants may be viewed as having minimal to zero repayment capacity. The closer you are to your retirement age, the more challenging it becomes to meet home loan eligibility.
Another major factor responsible for home loan application rejection is unpunctuality. Missing EMI deadlines and credit card dues will present you as a high-risk borrower in the eyes of your lender. Even if your application is not rejected, your lender may charge you high home loan interest rates. Hence, ensure that all your payments are made on time.
Moreover, do not forget to get the “No Unpaid Dues” certificate from your previous lenders.
Have you been job-hopping frequently? Though there is nothing wrong with changing jobs for better growth prospects, financial increase, or other personal reasons; such a practice will create a sense of uncertainty in the lender’s mind. Generally, home loan applicants are required to have a verifiable income and source with a job stability of at least three years for availing home loans. Failing to meet this home loan eligibility criterion may lead to the rejection of your application.
Moreover, if the company you work for, though renowned, is found to be unstable by the lender, your home loan application may be declined.
Low Credit Score
A good credit or CIBIL score is perhaps, the most critical determinant for home loan application approval. Lenders want to ensure that you are a low-risk borrower with a decent to excellent loan repayment capacity. On the CIBIL scale, your score must be 700 or above for home loan approval. Moreover, even for that range, those applicants that score excellent (800-900) will be charged lower home loan interest.
Meeting home loan eligibility alone does not guarantee loan approval. It is equally important to furnish all relevant home loan documents and proofs without any omission or falsity. Moreover, your signature on the home loan application must match the signatures on the proofs, or your application may be rejected.
You must apply for your home loan application wisely and carefully, taking into consideration your repayment capacity and the home loan eligibility criteria mentioned above. Find out your EMI using an online home loan EMI calculator. Using such a home loan calculator will give you quick and accurate results on the EMI, helping you manage your finances better. It will even help you decide whether it is within your means to shelve out such an amount every month towards loan repayment. A little planning and preparation go a long way in ensuring that your home loan application does not get rejected.