It goes without saying that before applying for a home loan, it is important for you to search for the right lender with affordable terms. However, to get a quick approval on your application you will have to abide by all loan formalities and ensure that your paperwork is in order. Lenders verify every aspect of your income, identity, and financial history before approving your home loan application. So, not being able to meet your lender’s criteria will lead to rejection. Take a look at the 4 important reasons for rejection of your home loan application.
Not meeting the eligibility criteria set by your lender
In order to be eligible for a home loan you must be a resident citizen of India and at least 23 years of age. Once you meet this basic requirement, you will have to check your chosen lender’s website or personally enquire with its representatives regarding the more detailed eligibility parameters they have in place.
Normally, lenders also give importance to your upper age limit and do not give high-amount sanctions to individuals approaching their retirement age. Apart from age, financial institutions give utmost importance to a stable job and consistent income. Since these criteria reflect financial stability, you are likely to face a rejection if you do not fulfil them. Take a look at these home loan eligibility criteria based on age, city of residence, and income to get an idea of what lenders normally ask for.
Not having a good credit score and credit history
Your credit score is a numeric representation of your credit history. A CIBIL score above 700 is considered healthy and establishes you as having a strong financial backbone. However, the lender also takes your repayment history for other debts into consideration while giving you a sanction. You will face a rejection if your lender sees irregularities such as late payments, EMI bounces, or high debt utilisation ratio. Since repaying a home loan is a lengthy process, maintaining a good track record in terms of your other loans will help you get a quicker sanction on nominal rate of interest.
Not having a creditworthy joint applicant
Home loan EMIs are big and to seek affordability you can plan to take the loan jointly with a family member. You may also want a co-borrower for your home loan to get a higher amount sanctioned to you. When you add a co-applicant to your home loan application, the lender will check both your credit score and financial history as well as that of your co-borrower. So, even if you have an excellent financial standing, your co-applicant’s low credit score and faulty credit history will become a reason for rejection of your loan application. Choosing a joint applicant with a good credit score is thus paramount.
So, avoid rejection by using an easy online home loan eligibility calculator, arrange the documents you need to submit in advance and keep the factors above in mind. Don’t forget to use a home loan EMI calculator to ascertain how much to borrow by calculating your EMIs before you submit your home loan application too.
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