Home Loans are something that most people apply for when they plan to buy a house. This is because most people do not have the funds to pay outright for a home. A home loan allows them to purchase their dream home. However, there are times when banks can reject Home Loans due to issues with the real estate builders, or the location of the property.
Whenever you are planning to apply for a Home Loan, you should also be prepared for the rejection of your loan request if you are residing in a property which was previously occupied by a person who had defaulted on their loan. This can even happen if you rent out your house to such people. Most of the banks blacklist the defaulters along with their address where they live. However, even if a specific address is not in the defaulters’ list, there are chances that the very locality is not in the good books of the lenders. In this case, your loan application may get rejected. Banks might deny you loan due to several other reasons, some of which are highlighted below.
Your card score should be high enough to get your loan approved. No bank will provide a loan to someone whose record is not good. Skipping EMIs (Equated Monthly Instalments), delay in paying the bills, and defaulting loans are some of the instances that can adversely affect your creditworthiness. These are bad indicators that will always reflect on and affect your credit history and report. So, you should always have a good credit record to get your Home Loan approved.
If your credit report is incorrect, it can hamper your loan from getting sanctioned. The errors can be anything, including payments being misreported, closed accounts still showing as open, and false report of late payments. These errors can result in your credit score dropping. Hence, it is necessary to check your credit report more often. If you find errors, get in touch with the concerned credit bureau to find out how you can correct them.
If you have the burden of too many loans, then your income will be calculated based on these loans. As a result, lenders will deem that you don’t have sufficient money to take on the burden of another loan, causing Home Loan Rejection. If taking more than one loan strains your income then paying off a new loan will be difficult. That is how banks view your financial status. Hence, they reject your loan application. Even if they approve your application, you will be categorised as a high-risk borrower. As a result, you will have to pay high interest on the loan.
Certain banks insist that the loan applicant has to work in any particular company for a minimum period of 3 years or more to be eligible for a loan. Also, if the company’s future is at stake or seems to be unstable, the lender will back out from providing a loan to an applicant from that company.
If you frequently face loan rejections, then it is not wise to continue applying for loans and facing rejections as this gets recorded in your credit report. So, the most important thing you need to do in this case is to identify the main reason behind your frequent loan rejections and then take remedial measures.
When you become a guarantor for someone, you need to be sure that the person is capable of paying back the loan. Never be in a hurry to sign as a guarantor for family and friends. If for some reason the applicant defaults on the loan, you will be liable to repay the amount. And, if you cannot repay the loan as a guarantor, then your name will be mentioned in the blacklist of the credit report.
On the whole, banks do not reject a Home Loan application on personal grounds, but these rejections are based on poor credentials of the borrower. Location of your home is one such criterion that can lead to loan rejection. However, there are several more that have also been presented here. Get in touch with the financial experts at MyMoneyMantra if you are worried about a rejection of your Home Loan. These experts will guide and assist you in ensuring you don’t face a problem when applying for a Home Loan.
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