Home Loan Rejection: An Overview
When purchasing a home, it is important to secure a suitable property and arrange financing without affecting future financial commitments. To facilitate your purchase financially, Home Loans can be a viable option. Before extending loans, your eligibility is assessed against some set parameters such as your age, income, and credit score. If your application is rejected, you need to familiarise yourself with the eligibility criteria and take steps to address the situation. You can do this by examining the reasons for rejection and working on improving your profile.
Reasons for Home Loan Rejection
Low Credit Score
Borrowers for a Home Loan should preferably have an ideal CIBIL score of 750 plus. Anything slightly below 750 might get you a Home Loan but it may not be as competitive, in terms of offerings. To ensure that you have a good credit score, pay your EMI bills on time, keep your credit utilisation ratio low, and monitor your credit report regularly.
Income Instability
Borrowers applying for a Home Loan are required to have a stable income, which shows their ability to repay the loan. Without a stable income, you may be perceived as a higher risk. Therefore, borrowers with financial instability may face loan rejection.
Incomplete Documentation
One of the reasons for the rejection of Home Loan applications is incomplete documentation. If you are applying for a Home Loan, make sure your paperwork is complete and you have submitted all the required documents for Home Loan approval.
Multiple Loans
If your chosen lender perceives you as a high-risk borrower, they may not offer you a Home Loan and having multiple loans does just that - it cam paint you as a high-risk borrower.
Property Issues
If you have selected a property that is non-compliant with our guidelines and policies, your Home Loan application may get rejected. Ensure that your property is free from any legal disputes.
In conclusion, if you do not want to face Home Loan rejection, do the following:
- Maintain a CIBIL Score of 750 plus
- Ensure a stable source of income
- Make sure you have all the documents required for a Home Loan
- Close the loans that you are currently servicing before applying for a Home Loan
Additionally, if you are transferring your Home Loan to us, ensure that you have an NOC letter given by your previous lender.
*Terms and conditions apply.
