Purchasing a house is one of the leading monetary goals of one’s life. It is a dream to have a home which fulfils all your dreams and aspirations. A home loan is a very vital aspect of a person who aspires to build a house of his own. Irrespective of all the checks, people face Home loan rejection, and it is a nightmare to meet a loan rejection. To avoid such types of situations, you need to know all Home loan rejection reasons:
Common Reasons for Home Loan Rejection
The main rejection for home loan rejections are:
1. A mismatch between Income and CIBIL Score
A high CIBIL Score does not guarantee you a home loan. Home loan providers have a minimum income criterion for a particular property. Even though EMI is in an allowable bound of 50% of revenue, still Home loan rejection is a likelihood. A mismatch between income and CIBIL score is one of the hidden Home loan rejection reasons.
2. Valuation of the property
Circular Rate is one of the criteria for assessment. Certified property values submit property valuation reports to the bank. Massive Deviations from fair valuation lead to rejection of your loan application process. Bank or HFC will not tell you the reason for loan rejection.
3. Employer
All the home loan providers maintain a negative list of companies, and if you are working in any of these companies, then the probability of loan disapproval is very high.
4. Frequent job changes
If you are a regular job hopper, then the possibility of loan rejection is very high. It is an unpredictable reason for your loan application cancellation.
5. The reputation of the builder
Builders have a preference that probable buyers ought to avail Home loan only from banks or HFCs that have pre-approved the development. The home loan provider has harmful projects and builders list. This list is prepared based on previous interactions of a bank with the builder regarding delays, disputes. Loans for risky projects are not entertained.
How to avoid Home Loan Rejection?
By many ways, you can avoid all the possibilities of home loan rejection, and the points are discussed below:
Maintaining a good CIBIL score
A score of 750 plus is considered healthy for lending while anything less than 600 is deemed to be weak. These matters must be settled. Resolving the previous and ongoing dues must be done before applying for a home loan.
Knowing beforehand how much credit you can use for
Home loan calculator helps you to understand how much mortgage you can get. You need to see that your Fixed Obligation to income ratio should not exceed 50% of your monthly income.
Job stability
An applicant who has been there in the present job for at least two years is preferred for loan approval.
Too many applications in a short time frame
Applying for loans for multiple sources within a short period signifies that you are short of credit. Lenders make out that you will not be able to repay your investment and your loan gets rejected.
Home is not merely an address, but it is part of our identity. Proper details regarding every minimum information of home loan must be kept in mind so that the wish to have a home of our own becomes a reality and should not just stay in dreams.
Read Also: What is A Loan Repayment
