Although applying for a home loan has become easy, there are many home loan rejection reasons. It is because financial institutions consider several factors before lending money to ensure the authenticity of the homebuyer and to minimize the risk of the lender by reducing the chances of default.
However, at times your application may get rejected due to reasons unknown to you. Let’s examine the home loan rejections reasons below:
1. Poor credit scoreOne of the main reasons for home loan rejections is usually poor credit score of the applicant. A poor score may indicate your inability to pay the said loan in time.
2. Improper DocumentationIn the home loan application, one needs to attach relevant identifications, income proofs, address proofs, etc. The lenders verify these, and any false or mismatch in the documents can lead to home loan rejections.
3. Property ApprovalWhile buying a property, the borrower should ensure that the property is registered and approved with the appropriate legal authorities. If the property is in dispute or very old, the home loan application may be rejected.
4. Guarantor for othersIf you have been a guarantor for a loan taken by your family members or friends, then there are chances of your home loan being rejected since you are also liable to pay those loans in case of default by the primary borrower.
5. Age of the borrowerAge is a significant factor since that will determine the tenure of repayment with the retirement age considered to be 60 years. Home loan rejections are higher for people who are close to the retirement age.
6. Career InstabilityIf you have changed jobs frequently in the past few years, there are chances that lenders will consider your career as instable. The reasons for the change are not relevant when it comes to a home loan. You should stay in a job for 2-3 years if you are planning to apply for a home loan in the near future.
Home loans are the preferred choice of home buyers as it provides tax benefit under Section 24 of the Income Tax Act, where one can claim tax deduction up to Rs 2,00,000 for the interest paid for a housing loan. However, to ensure seamless disbursal, it is imperative to understand the process of the loan application, the required documents, your credit score, property details, and such other requirements as may be required to get your home loan approved.
Click here to learn more about your eligibility and apply for a home loan.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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