Buying
home is a big step in individual’s life. Also, with the zooming property rates,
family responsibilities and other priorities towards mortgages it is difficult
to buy home through our savings entirely. Usually, a home loan is one of the
biggest liabilities. Considering the huge amount and the long tenure involved
it is important you do sufficient research and talk to the financial expert
before choosing your Home loan products. Lenders consider many factors before granting individual with
loan. The criteria to determine the eligibility and quantum of a loan differ
from one lender to another. Some parameters would be your good credit score,
ensuring timely payment of credit card dues, closing all loans taken earlier
and increasing level of income source.
However, there are some casual things due to which your loan might get
rejected.
Here are few reasons for loan rejections which
normally people many not be aware of:
Job Switch
Banks
and finance companies need that you have job stability. They have made it
mandatory that the applicant needs to be employed with a particular company
from minimum 3 or more years to get eligible for a loan. Banks may also
consider the company background, its growth and future stability. So, it is
highly advisable that the applicant stick to a particular job for minimum
period to get your loan sanctioned easily.
Default Residential address
Your
existing place where you live is also important consideration while applying
for Home loan. If the applicant bears the same address as
someone who has been a defaulter for either loan repayment or credit dues and
has been reported to CIBIL rating, there is a chance for loan rejection. Banks
often have database of negative PIN codes based on surveys and research.
Profile
Some
banks dictate that some geographic are or credit profiles are negative for
lending the loan and the bank won’t be able to sanction loans. In such cases,
one needs to discuss it with the bank and provide other security in form of
guarantor or insurance policies, investment paper, collateral securities, fixed
deposits. etc. in order to assure the banker about their repayment ability.
Old Building
A
bank will not fund old building if they are more than around 20-25 years old.
The criteria of the age of the property vary from bank to another bank. But,
the land value will always be considered by the bank. One can negotiate for a
lesser loan amount by adding some form of security and one can also increase
the down payment to get the loan sanctioned.
Credit History
It
is extremely important that you have a good credit score rating to avail any
form of loan. Before, lending out the loan, banks have a background check of
your credit history through a Credit Information Company like CIBIL (Credit
Information Bureau India Ltd.) and go through your repayment track record. You
can always visit the government recognized site for www.cibil.com and get your
credit report. The errors in your credit report can reduce your chances of
getting a good Home loan offer.
It is accessed by the bank’s credit department after you apply for the housing
loan for inputs on your credit history. Based on your credit score and the
above documents, the bank will ascertain your repayment capacity. In case you
have ever defaulted on any bill payment, it will reduce your chances of getting
a loan. After the bank is satisfied with the paperwork, it will offer you the
loan, which will typically range from 40-70% of the value of the property.
Every
bank has a record of the rejected Home loan applications in their database or can obtain a history
of loan application enquiries from CIBIL. When the applicant applies to a bank,
it will show up in the credit profile check about a fresh application or prior
rejection, etc. and if rejected it would probably affect the credit worthiness
of the applicant. It is highly advisable that one should not keep on applying
for loans without any reason.
