The Basics of Home Loan
Buying a house is one of the biggest financial commitments you make in your lifetime. While it is important to select the best property to set up your dream adobe, it is also crucial to arrange funds for the home in a manner that doesn’t affect your other financial commitments. The only way you can achieve this is by availing a home loan. Home loan leverages your future income to cater to your dream home.
Owing to the long home loan tenure, 15-20 years, lenders typically follow a very disciplined approach while evaluating or approving a home loan application. Once your credit profile and other eligibility criteria is met and they’re satisfied that you’re capable of repaying the housing loan, you’re approved for the home loan.
While following this stringent process, at times, your home loan application may fall short of some criteria and may get rejected. This may sound disappointing but if looked at from an objective point of view, this can be taken care of. The first step in this regard is to know the reason for home loan application rejection and taking corrective measures to rectify it.
Common Reasons for Home Loan Application Rejection
Here are some of the common reasons behind rejection of a home loan application:
Poor Credit Score
A credit score defines an applicant’s credit/payment history and the creditworthiness. If the applicant’s credit score is poor or has a patchy credit history, the lenders won’t get convinced of his repayment ability. This may lead to outright rejection of the home loan application. Nothing else in the home loan application is as critical as credit score.
Failure in Meeting Eligibility Criteria
In order to be eligible to get home loan approval, you must first meet the lender’s eligibility criteria. All lenders and banks have their detailed eligibility parameters in place. You need to check with your chosen lender and get yourself familiarized with their eligibility criteria. Not meeting the eligibility criteria of the lender is one of the most common reasons behind home loan application getting rejected.
Issues with the Chosen Property
A home loan can be availed for a number of reasons – to buy a new home, for construction of plot, to buy land, and for home renovation too. When you submit a home loan application, lenders generally are more inclined in approving those cases where the property is built on an undisputed land, is registered and has a good resale value along with the clear image of the builder/developer.
If the property you’ve chosen to take home loan for doesn’t meet any of the factors above, your loan application would be rejected. Make sure the property you choose is registered with an approved map, hails from a reputed and trusted builder and has a good resale value. This will maximize your chances of home loan application approval.
Submitting Incomplete Documentation
Complete and proper documentation is the prerequisite for any loan application, be it home loan or personal loan. This becomes all the more important in case of a home loan because of the large amount of loan involved. Lenders carefully check each and every document in your application for completeness, relevance, authenticity, and your signatures. Any gap in the required and submitted documents would either lead to loan application rejection or delay in processing.
Loan Application Rejection History
Banks and lenders look at your credit report to ascertain your credit profile and history. If you’ve applied for a home loan or any other loan previously and got rejected for it, this would lead to a rejection of your home loan application. It is therefore advised to know your loan application results from one lender before moving on to the other.
Lessons You Can Learn from the Home Loan Rejection Reasons
- Boost your credit score – Strengthen and improve your credit score by creating a history of timely and full payments and maintain a clean credit behavior. This will serve as the most important catalyst in your home loan application approval.
- Maintain an error-free credit report – Make sure your credit report is free of errors by checking it periodically. If you see an error, get it rectified ahead of time.
- Submit proper documentation – This is an important part and be meticulous with this one. Incomplete or wrong documentation is a strict no-no.
- Avoid job hopping – Lenders look for stability as far as an applicant’s employment history is concerned. Make sure you don’t have frequent job changes in your profile.
- Get familiar with loan eligibility criteria – While you may not meet the eligibility criteria of one lender, there are always other options. You can check with the other leading lenders to see if you meet their eligibility criteria.
To sum up, all we can say is to get your home loan application rejected or approved largely depends on you. A lender evaluates your loan application based on your credit profile and what documents you present. Make sure you nail both these areas while submitting an application for home loan with any lender.
If you’re finally decisive to buy the home of your dreams and looking for a home loan, tap here. Our eligibility criteria is easy to meet and we offer home loan at the best rate of interest. Feel free to write to us at firstname.lastname@example.org or call us on 1800-200-9898 for any queries regarding Home Loans from Clix Housing.