Reasons why bank rejects your home loan
A home loan is a kind of secured loan that is provided by financial institutions such as banks to purchase a property. The property is taken as collateral by the banks. Banks offer loans for the long term and the interest rates are lower than other kinds of loans.. The loans are repaid through easy monthly installments. The property as collateral is transferred to the loan borrower after he successfully pays off his loan amount.
Poor credit score
The credit score is compiled by credit bureaus in India. The first step while processing a loan application, the bank will access your CIBIL report from a credit bureau. The CIBIL score is measured on a scale ranging from 300 to 900, and if your score is low, the bank may reject your application. It is better to maintain your CIBIL score to get loans of various types.
Nature of work
If you work in a firm and are salaried monthly, it is easier to get a home loan. This is the opposite in the case of a self-employed person. Self-employed borrowers do not create the same confidence as salaried employees.
Change of address such as if you are living in a state where you work and the address mentioned in your documents is different in the sense that your application for a home loan requires an address that is your current address. If the documents provided don’t imply, the bank will reject your loan application.
Banks check all the whereabouts of the property a borrower is looking to purchase. They send technical experts to visit the property and study its physical condition, and location of the property. After a thorough inspection, if the bank finds that the sale is taking place at a much higher rate than its actual worth in the market, the bank will reject your loan application.
If you have taken a loan in the past and have been sloppy in repayment, it will harm your credit score as well as your reputation in the eyes of banks. The situation gets more difficult if you have defaulted on several occasions. The bank will reject your home loan application in the case of defaults.
If you are a youth, there is more chance of getting a home loan. Banks prefer young borrowers. The young borrowers have plenty of time to repay the loan amount. Banks don’t provide home loans to elderly people because they don’t have much time left in their life to repay the loan amount.
Current EMI burden
If a person already has so much EMI to pay, the banks find it difficult to provide a home loan to that person. To get a home loan easily one must repay his EMI and after that, they can apply for a home loan.
Income tax returns
A responsible citizen pays his taxes every year. Unless you have paid your taxes including income tax and have the necessary documents to prove it, the bank will not accept your application for a home loan.
Banks prefer more than one borrower of a property. The reason for this is that they will have two adults responsible for the same liability. If one person fails to repay the loan amount, the other person will come forward and repay the loan amount. There is a great chance of securing a home loan if more than one person applies to get a home loan.
Aside from a person’s age, the age of property also plays a major role in securing a home loan. If the property is damaged or in a dilapidated condition, the banks will shy away from accepting an application for a home loan.