You’ve completed all of the procedures to the letter, but you’re still unsure about your loan application’s fate. The most terrible experience is being denied a home loan, especially when you are in desperate need of one. Before rushing into the next bank to apply for your next house loan, make sure you’ve exhausted all of your choices. One of the major reasons for home loan rejections can be the applicant’s CIBIL score check. If the applicant has a low CIBIL score then the banks would reject the application right away.
Common Reasons for Rejection
Here are some of the common reasons for not getting approval on your home loan application. The reasons are as follows:
1. Applicant’s Age
The borrower’s house loan application will be declined if he or she is approaching retirement age. The lender is hesitant to lend to such borrowers because it determines that your repayment capacity is inadequate or non-existent after a few years. On the other hand, certain banks may be ready to grant a short-term home loan. Short-term loans for significant sums would result in exorbitant monthly payments, negating the convenience of taking out a home loan in the first place. As a result, the borrower’s age has a significant impact on house loan denial.
2. CIBIL Score
It’s critical to keep a decent CIBIL score in order to get a house loan approved. Make sure you have a good CIBIL score before applying for a home loan. The applicant must have a high CIBIL score in order to be accepted for a house loan. As a result, the applicant must ensure that his or her CIBIL score is 750 or higher when applying for a home loan. CIBIL keeps track of each individual’s credit score (Credit Reports and Risk Management Solutions).
3. Existing Loans
If you apply for a home loan while in debt from previous loans, the bank has the ability to decline your application since your liabilities exceed your income. The bank has every right to fear that your remaining income (after paying all of your existing expenses) will not be enough to repay the EMI for the house loan you desire.
4. Applicants without Working Experience
Individuals who have worked for the same employer for at least a year are preferred by banks. The bank uses the number of years of employment to assess the borrower’s stability and repayment prospects. As a result, freshers are not a preferred alternative when it comes to bank approval of home loans. For the same reasons, applicants who have changed jobs frequently may have their applications denied.
5. Unauthorized Property
Banks check to see if the property has been approved by the local government. If the bank does not meet specific conditions laid down by local authorities, the loan may be denied. Builders, on the other hand, are assessed by banks before their projects are funded. Even if the property is authorised, if you choose a builder who has not been approved or is on the bank’s blacklist, your prospects of securing a home loan are slim.
6. Income Tax Returns
Banks and lenders look for a regular track record of filing income tax returns for the previous two years before authorising a house loan. You must file your income tax return every fiscal year, even if your employer has not issued you with Form 16. Before issuing a home loan, banks and lenders look for a proven track record of filing income tax returns.
7. Minor Rights Property
You may be turned down for a house loan if the property you’re buying has minor rights. If the seller has not disclosed information about a minor with ownership rights, your home loan application is likely to be rejected. Banks may refuse home loan applications for properties with minority rights. The bank is likely to reject the application if the seller has not disclosed that the property is owned by a minor.
These are some of the major reasons for home loan rejections. However it is always advisable to check your CIBIL score along with other factors before applying for a home loan in order to avoid rejection.
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