Fight Against Coronavirus   1. Wash Your Hands Frequently   2. Maintain Social Distancing   3. Avoid Touching Eyes, Nose and Mouth   4. Practice Respiratory Hygiene   5. Stay Informed and Follow Advice given by Your Healthcare Provider   6. If You have Fever, Cough and Difficulty Breathing, seek Medical Care Early             Dial National Helpline Number +91-11-23978046 or 1075

What are Major Causes of Home Loan Rejection & How are they Affecting your Finance?
By Anupama Deshpande | Sep 26, 2018

It may look very simple to many of us to get a home loan as there are so many lenders, including banks, Housing Finance Companies and NBFCs, offering for home loans at very low interest rates in the market. Home loans are offered for long-term whose repayment period is around 15 to 30 years. Being a long tenure, stringent approval process is involved in sanctioning of these loans by the banks, NBFCs and housing finance companies (HFCs).


Interested to know: Smart Ways to Reduce your Home Loan Tenure and Save Lakhs of Home Loan Interest

Majority of salaried employees having satisfactory monthly income or self-employed with good income get their home loan applications approved very easily but still there are many applicants for home loan who have to face a straight forward rejection too.

It is always a dream of owning a home of majority of us. It is a big financial goal of our life. Some people are lucky who get the home in their own name when they are young but for some, it takes a lot of time to build a home in their name and they have to even wait till their retirement for the same.

People go for getting home loans to buy their residential property as the amount involved in it is very huge. Lenders offer the home loan at a very low rate of interest. Further, home loan borrowers also get income tax benefits under section 80C of income tax act on the repayment of principal amount as well as interest.

Suggested reading Is it a Good Idea to Buy a House at a Young Age?

Having many home loan providers in India, people are having many options for suitable home loans according to their requirements. Nevertheless, some people have to face home loan rejections too. We are detailing about - What are Major Causes of Home Loan Rejection & How are they Affecting your Finance? below:

1. Your Credit Score is not upto the Mark

Not having a good credit score is one of the important reasons of home loan rejection. You are suggested to first check your credit score before applying for a home loan. If you have a low credit score, then there are many chances that your loan application will get rejected. Non availibility of home loan in time will affect your finance.

So if you have a poor credit score then you should first concentrate on improving your credit score to at least above 750 mark and then should you apply for home loan.

2. You are having Unstable Job

In case, you are changing your job frequently and there is no job stability for you in the past then the lender will hesitate in approving your home loan application. You must understand here that if there is no stability in your job then the lender may consider it as your unstable behaviour.

Job Stability is very primary concern for the lenders' point of view. Some of the lenders also place criteria of having minimum employment of continuous 3 years in your existing company.

Therefore, in order to stay away from home loan rejections, you must remain stable with your job as if you are not getting the home loan funds in time, you will not be able to buy the house.

Suggested reading When should you Refinance a Home Loan?

3. Your Home Loan Application has been rejected before by other lenders in past

It may be a scenario that your home loan application has been rejected before because of any of the reasons then there are many chances that the lender to which you are placing your home loan application, also rejects your case. In this way, you won't be able to secure required finance for purchasing your dream home.

It is, therefore, suggested to wait for some time before applying home loan with other lender once you application is already rejected. In the mean time, pay attention to improve your other things like improving your credit score, repayment of all dues in time, filing of ITR in time, etc.

Interested to knowWhich is Ideal Tenure for Home Loans? Short Tenure or Long Tenure

4. Many Other Debts that you have

It has been seen that people keeping taking different kinds of loan and that is the reason why their EMI outgo becomes higher and higher day by day. One must try to keep his/ her maximum EMI outgo below a certain mark so that it won't become a hurdle while availing home loan.

Your home loan application may be rejected if your loan to income ratio is higher than the required ratio. Lenders prefer to extend the loan to the applicants having this ratio below 40%. So if you want to get proper funding from the lender as home loan, you need to pay attention towards this.

In order to bringing your loan to income ratio down to a satisfactory mark, you must prepay all the possible debts.

It should be noted that availing home loan is a simple task, if everything that is necessary for it is in a proper shape & order. You must keep in mind to fulfil required conditions which are very basic for availing a home loan. It should be noted to compare all the home loan providers and choose the best among them who is offering you the loan at least interest rate. It will save a lot of your amount to be spent on interest part.

About Anupama Deshpande
Anupama is a Co-Founder of CodeForBanks.com. She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for CodeForBanks.com & important resource to all those around her.
ALL INDIA BANKS LIST
A B BANK LIMITED ABN AMRO Bank N V ABU DHABI COMMERCIAL BANK ALLAHABAD BANK
American Express Banking Corp ANDHRA BANK Antwerp Diamond Bank NV AU SMALL FINANCE BANK LIMITED
AXIS BANK B N P PARIBAS BANDHAN BANK LIMITED BANK OF AMERICA
BANK OF BAHARAIN AND KUWAIT BSC BANK OF BARODA BANK OF CEYLON BANK OF INDIA
BANK OF MAHARASHTRA BANK OF TOKYO MITSUBISHI LIMITED BARCLAYS BANK BHARATIYA MAHILA BANK LIMITED
Calyon Bank CANARA BANK CAPITAL SMALL FINANCE BANK LIMITED CATHOLIC SYRIAN BANK LIMITED
CENTRAL BANK OF INDIA CHINATRUST COMMERCIAL BANK LIMITED CITI BANK CITY UNION BANK LIMITED
CORPORATION BANK DBS Bank India Limited DCB BANK LIMITED DENA BANK
DEUSTCHE BANK DHANALAKSHMI BANK EQUITAS SMALL FINANCE BANK LIMITED ESAF SMALL FINANCE BANK LIMITED
EXPORT IMPORT BANK OF INDIA FEDERAL BANK FINCARE SMALL FINANCE BANK LTD HDFC BANK
HSBC BANK HSBC BANK OMAN SAOG ICICI BANK LIMITED IDBI BANK
IDFC First Bank INDIAN BANK INDIAN OVERSEAS BANK INDUSIND BANK
JAMMU AND KASHMIR BANK LIMITED JP MORGAN BANK JSC VTB BANK KARNATAKA BANK LIMITED
KARUR VYSYA BANK KOTAK MAHINDRA BANK LIMITED Krung Thai Bank Public Co. Ltd LAXMI VILAS BANK
MASHREQBANK PSC MIZUHO CORPORATE BANK LIMITED NORTH EAST SMALL FINANCE BANK LIMITED OMAN INTERNATIONAL BANK SAOG
ORIENTAL BANK OF COMMERCE PUNJAB AND SIND BANK PUNJAB NATIONAL BANK SBM BANK MAURITIUS LIMITED
SHINHAN BANK SOCIETE GENERALE SONALI BANK LTD SOUTH INDIAN BANK
STANDARD CHARTERED BANK STATE BANK OF BIKANER AND JAIPUR STATE BANK OF HYDERABAD STATE BANK OF INDIA
STATE BANK OF MYSORE STATE BANK OF PATIALA STATE BANK OF TRAVANCORE SURYODAY SMALL FINANCE BANK
SYNDICATE BANK TAMILNAD MERCANTILE BANK LIMITED THE BANK OF NOVA SCOTIA THE NAINITAL BANK LIMITED
UBS AG UCO Bank Ujjivan Small Finance Bank Limited UNION BANK OF INDIA
UNITED BANK OF INDIA UNITED OVERSEAS BANK LIMITED UTKARSH SMALL FINANCE BANK VIJAYA BANK
Woori Bank YES BANK ZILA SAHAKARI BANK LTD