5 Reasons Why Your Home Loan Application Might Get Rejected

By Jay Dee Infra In Home Loan No comments

5 Reasons Why Your Home Loan Application Might Get Rejected

When applying for a home loan, you submitted all the documents and you are also eligible for the same. Yet, your loan application was rejected. Thinking why? There are many factors that banks consider while approving a loan. PropGuide lists top five reason why home loan applications are rejected:

Has Credit Information Bureau (India) Limited (CIBIL) left any comments with your score?

You might have the perfect CIBIL score (a good score for home loan in 700). However, the closer you are to 900, the more the faith financial institution will have in you.) But, numbers are not the only element that define credit scores. CIBIL also gives its remarks along with scores. These remarks might arise after short-term equated monthly instalments (EMIs) are replaced with long-term EMIs, or if loans go past the due date. Banks can refuse loans based on such comments. Banks also have a screening process under which if you are listed as a former defaulter, your loan application might be rejected.

Home Loan Rejected

Is your guarantor good enough?

While your credit score and record might be up to the mark, if your guarantor’s score is bad or has a history of defaulting, chances of your application being rejected become higher.

Are you over-leveraged?

Your loan application might be rejected for being over-leveraged. If you have other loans on your name, in spite of a heavy monthly salary or assets that can give good returns, banks might see it as a risk. Bankers always consider the worst case scenario and if they see that you might not be able to service the loan, they reject your application. This holds true even if you have already paid your loans.

Do you have a good tax-paying history?

Banks see a few years of tax paying history before giving a loan. Though they peruse the returns of the last two years, a long tax paying history always helps. For instance, if you started your career recently, banks might find it tough to acknowledge that you will be able to serve a long-tenure loan.

How authentic is the developer?

Even though its not you, it might be your real estate developer. Your bank might not want to loan for a project or a home that is being built either by an unknown developer or one that does not have a good reputation. It is a bigger risk. If the developer is known for delays or for malpractices during construction, it might have an impact on your loan application.

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