There are several reasons of rejecting a home loan application by a bank. Out of these reasons, most commonly found are low credit score, lower income levels and non-payment of loans and credit cards. More reasons can be traced out such as rejection of the same application by other banks, job instability and location of property in a defaulters’ area. Hence, if your home loan application has not been approved, the reasons can be any one from the list given below.
You are paying your credit card balances on time. Your credit score is ranging in 500 to 600. You have paid all your previous dues. And you have earned a striking promotion three months back. But still you are frustrated with the rejected home loan application. Why? Just scroll down to know the reasons of rejection. You may not be even directly involved in it.
Job hopping is injurious to home loan approval
Just like most of the young people, you have a tendency of switching jobs. But this can seriously affect the bank’s decision to offer home loan. Job stability of the applicant is an important area of concern for offering home loans. You must stick to your job for a period of at least two to three years. Well, this can be useful for your career growth as well as for approval of home loan application.
Clear the defaulter list issue
Suppose, one of your family members have been negligent in paying dues and is covered under the defaulters’ list. It may also be your tenant. As the residential address matches with yours, your home loan application may be rejected. For resolving this issue, discuss with your bank that you do not have a personal relationship with the tenant. In the case the person is your family member, and then he or she must not dependent on you.
Check the bank’s internal policy
A bank is bound by its internal policies as well. It has certain restrictions in granting loans to certain income profiles or geographic regions. And unfortunately, you may be the one including in that rejection list! You have a remedy by discussing with the bank manager and arranging collateral security for the purpose.
Old building can be an issue
If the building is of around 20 to 30 years old, then the bank will not consider appropriate to grant home loan. This ‘age’ of building is different for all banks.
Prior rejection leads to rejection
If your home loan application is rejected previously, then it may result in rejection again. The banks have in-built databases containing previously rejected loan applications.
It is better not to approach different banks at the same time for home loan. If it is rejected by one, understand the reason and update your credit records accordingly. You must also check the property to be purchased before applying for home loan. If you are not the defaulter, then discuss with the bank manager about the same. Banks reconsider their decision when they feel that the circumstances are genuine enough.
