7 Reasons a Loan Against Property May be Declined
There are a variety of factors lenders take into account before approving a Loan Against Property. The criteria that establishes the quantum of a loan and its eligibility differs from lender to lender. If you do not fulfill the eligibility criteria, your application for a Loan Against Property will be rejected. Maintaining a good credit score; making sure payment of credit card dues is promptly made; enhancing your income levels; and closing off all earlier loans will help greatly when applying for a loan.
There are a few more reasons that play a role in loan rejection. Read on to understand some of these reasons which you may not be familiar with.
1) Repeatedly changing jobs
Job stability is one aspect that holds utmost significance, at least from the perspective of a bank. In fact, there are various banks which have made it compulsory that an applicant has to comply with a specific company for three or more years if you want to obtain a loan. While processing an application, banks also judge the company that you are employed at and its stability. To make certain that your loan application is not declined, see that you refrain from switching jobs and stick to a particular one for at least one year.
2) Rejection of a previous loan application
Banks keep a record of the entire list of loan applications they have previously rejected. If they do not have this list in their database, obtaining the history of loan application inquiries from credit bureaus is also not a problem. If you have been declined a Loan Against Property and you have applied for a fresh loan from the bank, the rejection will be available in the credit profile check. As a result, it will adversely affect your creditworthiness. Avoid applying for loans without any reason.
3) Residential address on the defaulter’s record
Bearing the same address as someone who is a defaulter, either owing to credit card dues or loan repayment and this situation has been reported to credit bureaus is another cause for the rejection of your loan application. Depending upon historical delinquency experience, very often banks have negative pin codes. Based on this list, banks do not lend loans to certain residential addresses. This happens because the residential area matches with a disproportionate number that is on the defaulter’s list.
4) The builder is not approved
When you Apply for Loan Against Property your loan could be denied if your property is constructed by an unapproved builder. A majority of lenders have a condition that a Loan Against Property is granted to approved builders only. In other cases, a builder is approved by the lender but the project under which purchasing a house is possible is not approved. In this case too, a loan is not provided. Avoiding these hassles is easy. All you have to do is make sure you apply for a loan from a lender that has approved the project as well as the builder.
5) The age factor
If you are edging towards retirement or are already retired, obtaining a Loan Against Property is tricky. Lenders are prompt to reject an application owing to an unsteady source of income. In such situations, you can try opting for a short-term home loan. You need to know however that choosing this kind of a loan results in higher EMIs.
6) Possessing a bad credit history
Lenders are naturally hesitant to loans to individuals with a bad credit history. Lenders want assurance that you are going to repay the loan promptly. Your credit history needs to show proof of this fact. Late payments and defaults from your side of the bargain chalks out a bad credit history and gives the impression that you are unreliable when it comes to repayments. This leads to application rejection. Opting for a credit repair or borrowing money from lenders who are willing to offer individuals with a bad credit history a loan is your best bet.
7) Inadequate income
For credit to be passed, the lender has to be convinced that you have the capacity to pay back the loan. If the lender feels that you do not possess the required amount of income to support your lifestyle and regular EMIs, they may decline the Loan Against Property. When you have an increased income, either in the form of a raise in salary or by obtaining money through a part-time job or rental income, you can merely reapply. You can also resolve this issue by going in for a reduced loan amount.
Where can I get a Loan Against Property? If this is a question on your mind, all you have to do is do your research and connect with the right lenders to avoid these above-mentioned reasons that lead to loan rejection. MyMoneyMantra can help you find the right loan option and ensure you get the best rates.
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