You followed all of the procedures exactly, but you’re still worried about the destiny of your loan application. The worst experience is getting rejected for a home loan, especially when you are in desperate need of one. Before you hurry into the next bank to apply for your next home loan, make sure you’ve exhausted all of your options. The applicant’s CIBIL score check can be one of the key reasons for home loan denials. If the applicant has a low Credit score, the banks will reject the application immediately away.
Reasons for Home Loan Rejection
Here are some of the most typical causes for your home loan application not being approved. The following are the reasons:
Age of the Applicant
If the borrower is nearing retirement age, his or her home loan application will be denied. The lender is cautious to lend to such borrowers because after a few years, it deems that your repayment capacity is insufficient or non-existent. Certain banks, on the other hand, may be willing to make a short-term home loan. Short-term loans for large quantities would have expensive monthly payments, undermining the convenience of getting a home loan in the first place. As a result, the borrower’s age has a considerable impact on the refusal of a home loan.
CIBIL Score
It is vital to maintain a good CIBIL score in order to get a home loan approved. Before applying for a home loan, be sure you have a strong CIBIL score. To be eligible for a home loan, the applicant must have a high CIBIL score. As a result, when applying for a home loan, the applicant must ensure that his or her CIBIL score is 750 or better. CIBIL keeps track of each person’s credit score (Credit Reports and Risk Management Solutions).
Existing Debt
If you apply for a home loan while still in debt from past loans, the bank may reject your application since your liabilities outweigh your income. The bank has every reason to be concerned that your residual income (after paying all of your present bills) will not be sufficient to repay the EMI for the desired housing loan.
Applicants with no Prior Work Experience
Banks appreciate employees who have been with the same company for at least a year. The number of years of employment is used by the bank to assess the borrower’s stability and repayment chances. As a result, when it comes to bank approval of home loans, freshers are not a favoured option. Applicants who have changed jobs frequently may have their applications declined for the same reasons.
Unauthorised Possession of Property
Banks investigate whether or not the property has been approved by the local authorities. The loan may be refused if the bank fails to meet certain restrictions imposed by local authorities. Banks, on the other hand, evaluate builders before funding their projects. Even if the property is authorised, your chances of obtaining a house loan are minimal if you choose a builder who has not been approved or is on the bank’s blacklist.
Property Minor Rights
If the property you want to buy has minor rights, you may be denied a mortgage. Your home loan application is likely to be refused if the seller has not revealed information regarding a minor with ownership rights. Banks may deny mortgage applications for homes with minority rights. If the seller does not reveal that the property is owned by a minor, the bank is likely to reject the application.
Returns on Income
Before approving a home loan, banks and lenders check for a consistent track record of filing income tax returns for the previous two years. Even if your employer has not provided you with Form 16, you must file your income tax return each fiscal year. Banks and lenders look for a demonstrated track record of filing income tax returns before offering a home loan.
Conclusion
If you have a low CIBIL score then you can follow the steps on how to improve CIBIL score in order to obtain a home loan in India. Moreover, it is advisable to check your CIBIL score before applying for a home loan in order to avoid rejection. Having multiple loan rejections can further lower your CIBIL score.
