Are you planning to apply for a home loan? Do you want to know the factors that cause the rejection of
your loan application? If yes, this article gives you some useful information. Whether you are buying a
house for residential purposes or as an investment, obtaining a housing loan is a feasible way to meet
the fund deficiencies. In some cases, though you meet the Home Loan Eligibility Criteria, but still your
Home Loan Application may get rejected. Why? Here goes the answer.
Age matters a lot
The age of the loan applicant plays a major role. It determines your borrowing capabilities. The more
aged you are, the more are the chances of you being rejected. If you are nearing retirement, the loan
application for an extended tenure shall be rejected. Lenders prefer debtors in 20s and 30s with a
consistent monthly revenue. You can take a short-term home loan if your age does not qualify for a
longer tenure. The shorter the loan tenure, the more shall be your EMI; the longer the loan tenure, the
lesser shall be your EMI.
Meagre Credit Score
Credit score and credit history should be excellent. A well-rated loan applicant is considered more
potential to repay dues whereas an underrated loan applicant is considered less potential. Anything more
than 750 is considered ideal and anything below 600 is considered poor. A poor credit score will result in
the rejection of the loan application. Be sure to improve the score. Investment consultants advise
potential housing loan applicants to maintain the old credit card and keeping it paid off. Maintaining a
long-run payment history is a big plus.
Pay attention to how much you can apply for
The amount of loan sanctioned by your banker depends upon your income and the value of the property
under consideration. The loan application shall be disapproved when you have inadequate funds to
repay debts. If you have an outstanding loan already, bankers evaluate the effective income by
subtracting the monthly EMI that goes towards the outstanding loans. Lenders do this just to ensure that
the fixed obligation to income ratio is less than 50% of your monthly earnings. Add your spouse or other
family members as co-applicants if you have multiple outstanding loans.
Employment stability also counts in addition to your annual income. A loan applicant with a better
employment history has more chances of being approved than an applicant with an unstable
employment history. The brand fidelity of builders is another major consideration. Be sure to work with a
reputed realtor. Be extremely cautious when signing as a loan guarantor to somebody. You shall be at
risk if the borrower does not repay the loan. People keep continuously applying for a home loan even
with a history of previous rejections.
Keep in mind the above considerations. You can also consult investment advisors who can guide you
better. The best idea is to keep your credit score unaffected since it is a prime element.