Rakesh Kumar, a resident of Delhi, made the final decision to purchase his own Noida residence after living in a rented residence for more than five years. He got some money together for the down payment and decided to get a bank loan for the rest. While he was getting ready for the other steps necessary to purchase his dream home, he applied for a home loan.
But after two weeks, Kumar found out that the bank had turned down his application for a home loan despite the fact that he had a high-paying job and a premium property preference. Kumar was taken aback. However, this can occur in numerous situations. Let’s find out what could have led to a home loan being denied.
Unsteady employment
Your employment is the sole source of your income. In order to successfully repay the home loan over the course of 10 to 15 years, your source of income needs to be stable. The stability of your employment reassures lenders that you will repay the loan on time because lenders place a high value on your employment.
Lenders will check your employment history and the credibility of your employer when you apply for a home loan to make sure you have a steady job. If you don’t, your application might be turned down.
Problems with your credit
A credit score tells you how well your finances are doing. It tells if the borrower makes their payments on time or not. The credit report also mentions loan defaults and delays in repayment. It may be difficult for you to obtain a home loan if your credit score is below 600.
Your chances of getting a loan are very good if you have a score of 700 or higher. However, rejection can occur at any time, even for those with excellent credit. For instance, rejection is inevitable if you experience an excessive number of delays and defaults on EMI payments.
Adhil Shetty, CEO of BankBazaar, states, “Since a home loan is secured, two essential conditions must be satisfied for its approval.” com. The property must be legal and approved by the relevant government authority, and you must have sufficient income to repay the loan.
“When an application for a home loan is denied, borrowers frequently reapply, increasing their risk of appearing credit-hungry and lowering their credit score. To increase your chances of getting a loan, he adds, you should check your eligibility and work on filling in the gaps in your financial profile rather than reapplying right away.
The acquisition of a property necessitates extensive due diligence on a number of fronts. The builder from whom you are purchasing the property is one of the essential checks you are required to carry out. No matter how expensive the project is, getting a home loan can be difficult if the builder is not approved by the banks.
Before you buy a house, you should check with your bank or other financial institution to see if the builder has been approved by them.
If the property isn’t approved, you probably won’t get a home loan, and even if you do, the interest rates will probably be very high. To stay away from this, it is great to check the endorsement of the property you are purchasing. Occasionally, the housing project is approved, but not all towers or units.
There could be many reasons for this. Therefore, before applying for a home loan, verify the tower and unit’s approval. You can avoid unnecessary rejection by conducting an advance check on approval. Before you decide to buy the property, do thorough research on its location, requirements, and approvals.
Problems with property valuation
The value of the property can help you get the money you need from the bank. If you are purchasing a resale property and the property’s value is less than what you need from the bank, your home loan might be denied.
A lender typically assigns a value that is lower than the property’s current value. This lowers their risk in the event that the borrower fails to repay the loan.
Conclusion
It is clear that your application for a home loan is subject to a number of factors, and even if you have a good job, it could still be denied. Therefore, you must conduct an eligibility check prior to applying for the loan to avoid rejection.
Finding Funds
* If your application has been rejected, rather than reapplying immediately, focus on filling in the gaps in your financial profile. * Buying a property requires thorough research of multiple factors, including the builder and the specific property. * It may be difficult to obtain a loan if your credit score is less than 600.
