Reasons for Rejection of Housing Loans in India

Reasons for Rejection of Housing Loans in India

It is common in India for home buyers to get financial aid in the form of housing loans to build or buy their dream home. The whole process takes extensive study and choosing practical options from the vast lenders market and hence the rejection of housing loans become common too.

Mr. Vaibhav, who recently purchased one of the new flats for sale in Chrompet says that “Being aware of hurdles and flaws in the process is necessary for an applicant”. While being ready is vital, it is also important to know why some applications are rejected to avoid such mishap and boost your Home Loan eligibility

Want to avoid the Rejection of Housing Loans? Check these 14 common reasons

1. Dues are unpaid with bad credit score:

First and foremost, the credit score of the applicant is duly evaluated. It is seen whether the prospective borrower had paid credit dues and EMIs of existing loans on time without default. A good credit score is backed by punctual credit payments that do not go over the deadlines. The income of the applicant is evaluated by reducing the credit bills that he/she is paying every month. If that seems to be insufficient, then the banks do not sanction the loan.

2. Old applicant:

The applicant should be young because housing loans are long-term loans. An old applicant can opt for short-term loans but that comes with higher EMIs.

3.Job instability of the applicant:

If the applicant had switched different jobs in the past, the banks might not consider processing the application. The lenders expect the borrower to be employed in a reputed firm for a long time to be eligible for the housing loan.

4.Being a guarantor to someone else’s loan:

The applicant might have guaranteed to someone else’s loan and they might be a defaulter. If the borrower had not repaid, the guarantor would also be the responsible for the default in payment. It reflects badly when bankers scrutinize the applicant.

5. Rejected applications in the past:

The CIBIL keeps the record of previous loan rejections. So, it is advisable to know the result of your application from the previous bank and address it the next time you apply for the loan.

6. Not filing tax returns every year:

Even if you do not receive Form 16 from your employer, you should file your income tax returns regularly. Lenders usually see for the previous two years filing track record before sanctioning the loan.

7. Unsuitable property as a security:

Applicant has to provide security for home loans and mostly the applicant provides a property. But the property has to have decent resale value and should be easy to sell. The documents of the property should be available and if all these points are not met, the banks can reject the loan application. Problem with the title deed can also lead to rejection.

Other silly reasons for which the loan application is rejected:
8. Mismatch in signatures:

The signatures should match and some banks carefully see if the signature on the documents and the application match. If they are not, the banks can reject the application. Mrs. Guru, who recently wanted to apply a loan to buy one of the apartments in Pallavaram Radial Road faced this and she says that this silly mistake should be avoided at all costs.

9. No response on call-backs:

The contact number that the applicant had given on the application would be called by the authorities for verification. If the applicant does not respond to the calls, the banks consider it as no response and they cease the loan application process.

10. Address troubles:

The applicant might have moved to a new place and it would have been the address of a previous defaulter. The previous resident might not have changed this address in the records, and the database would consider the present applicant as the previous defaulter which could lead to rejection.

11. Property with rights problem:

The property that the applicant is going to buy might have rights to the minor of the owner. If the seller had not mentioned about that, then the loan application can get rejected on that grounds.

12. Being a self-employed entrepreneur or businessman:

Even businessmen who are established and successful might not get the loan approved if their line of business is not stable.

13. Not getting NOC from the previously closed loan:

If the applicant had a previous loan that had been repaid, then he/she should get the No objection Certification post closure. The absence of the NOC can also lead to rejection of the currently applied loan.

14. Default on telephone bills:

Unpaid telephone bills can also lead the banks to reject the application.
There are a lot of things like these that could go wrong and lead to loan rejection. Make sure that all these silly flaws are addressed and cleared from your side as an applicant to ensure a smooth process.

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