The latest bi-monthly monetary meeting of the RBI has not changed the repo rate, which remains at 4%. Resultantly, the home loan interest rates have not altered as well, encouraging prospective homebuyers to apply for a loan.
However, the number of rejections has increased significantly, owing to different reasons.
Top 4 reasons behind the rejection of a home loan application
Financial institutions often reject housing loan applications based on multiple reasons like –
- Incorrect form fill-up
Issues with the form fill-up, be it online or offline, can be a significant reason for rejection. While completing the application process, borrowers need to ensure that they have understood every field on the form, and provide adequate information, accordingly.
- Providing false information
Your housing loan application will face rejection in case you provide falsified information in the form. Since lenders perform a thorough verification, they will not approve the respective loan application if they come across any such issues.
- Legal issues with the concerned property
In case of any legal issues with the concerned property, a home loan application will get rejected. Since such properties are difficult to resale in case of a default, financial institutions will not extend an advance against them.
- Failure to submit needed documents
Borrowers need to submit a set of documents along with their home loan application. It includes income proof, KYC details, address proof, and business details for self-employed individuals. In case of any mistakes here, it can also result in a home loan application rejection.
Apart from these, failure to meet the required eligibility criteria is another prominent reason for the rejection of the housing loan application. However, one can easily avoid such mistakes and improve their chances of securing a home loan by remembering some easy pointers.
4 ways to improve a home loan application
- Improving on the eligibility
Since meeting the eligibility norms is mandatory for any housing loan application, borrowers can improve on this pointer. Primarily, they can focus on their credit score and improve it, as it can determine their home loan EMIs.
- Keeping your documents handy
As already mentioned above, failing to submit the required document can lead to the cancellation of a loan application. To avoid any such incidents, borrowers can make a list of such documents that can keep them within reach to ensure successful submission of the same.
- Applying as per the requirements
In case borrowers apply for an astronomical amount, they are likely to face rejection. While performing a home loan online application, they need to take their repayment capacity and the concerned property’s valuation into consideration.
Since lenders use the LTV ratio format to determine the loan amount, it is vital to be aware of the said property’s actual market value and apply accordingly. Moreover, borrowers can use a home loan EMI calculator to learn more about their monthly installments and apply accordingly.
- Not making multiple application
Even though home loan rates differ from one lender to another, instead of making multiple applications, one should focus on one. The reason being, lenders perform a CIBIL check when they receive an application, and such verification affects an individual’s credit score. Additionally, it portrays such borrowers as credit-hungry individuals, which is never ideal.
However, one can quickly avoid the hassle of an application by opting for a lender that extends pre-approved offers. Such offers streamline the loan application process and save time. It is available on financial products like home loans, loans against property, etc. Borrowers can check their pre-approved offer by submitting their essential contact details.
A home loan application is a lengthy process and includes multiple steps. Borrowers can keep a note of the aforementioned information to make this process easier for them. Also, they can learn the benefits of taking a joint home loan in case they struggle to meet the criteria of a single-applicant housing loan.