By sanjit Posted 07-09-2023 Architecture
Buying a home is one of the most significant and life-changing decisions one can make. If you're considering applying for a home loan, it's crucial to understand why your application may be rejected. Home loan rejections are common and they occur due to various reasons. It's essential to be aware of the different factors that could lead to your application being turned down. This knowledge can help you make better-informed decisions and avoid costly mistakes.
As part of the loan application process, the credit history of the borrower plays a key role. If the borrower's credit history is not satisfactory, the lender may decide to reject the loan. It's important to review your credit report and take steps to improve your score before submitting your application. Cibil scores act as an indication of a person's creditworthiness, i.e., a cibil score indicates whether or not a person is responsible when it comes to repaying credit, EMIs.
If you have a low credit score banks usually deny loans. They may consider you a high-risk borrower, and may not approve the loan. A person's debt-to-income ratio is another factor that affects their credit score. It is usually assessed when they already have debts or a current loan. A high debt-to-income ratio may indicate that a person is struggling with their loan repayments and may be refused a loan.
People with stable jobs are preferred to be given loans. The main reason behind this is banks ensure that the person who is taking a loan is getting a regular income to commit to heavy EMIs in home loans. It is for this reason that banks do not give out loans to small business owners, interns or people on probation unless they have solid collateral, such as a guarantee or a partner with a stable job.
Furthermore, home loans are usually larger loans than vehicle loans or education loans, so the person taking out a home loan usually has to have a higher side income. It is unlikely that an individual earning 20,000 rupees a month can get a loan for say 1 crore. Banks always ask for pay slips for the past three years in order to determine if you can pay off your EMIs.
An essential part of the home loan process is having the right documentation. When applying for a home loan you need to provide various documents like resident proof, identity proof, bank statements and property-related documents. If you provide any false or fake documents or documents with discrepancies your home loan application might be rejected. Before submitting your application, double-check that you have provided all the required documents and that they are up-to-date.
Sometimes, home loan rejections may happen due to property-related issues. A home loan may be rejected if the property you wish to buy is not approved by the bank or if there are legal disputes related to it. Ensure that the property you are considering purchasing is in good standing by conducting a thorough inspection. Before finalising a property purchase, it's crucial to conduct a thorough inspection. Check for any signs of structural damage, plumbing issues, or electrical faults. Additionally, arrange for a pest inspection and a home inspection to ensure the property is pest-free, safe, and suitable for living.
Conducting thorough research is crucial to obtaining the best housing loan deal. Following the above guidelines can help you avoid rejection of your home loan application. You should also check the eligibility criteria for home loans of your chosen bank, since they may differ, assess the home’s value and do your research, especially if you are a first time home buyer in Goa. It’s a great time to buy real estate in Goa - so don’t wait.
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