From buying your first home to constructing a new house, acquiring land, or renovating your home, a Home Loan can fulfil all your financial needs. All the salaried, professionals or self-employed individuals can easily make a Home Loan application and avail the benefits.
An individual can opt for a Home Loan to manage his/her financial requirements in a better way, as they can get a loan amount up to Rs.10 crore with flexible repayment option and quick disbursal.
5 Reasons Why Your Home Loan Application gets Rejected
Here are a few reasons that result in the rejection of your Home Loan application, and they must be paid attention at the time of application.
1. Low Credit Score
A low credit score is one of the reasons that can cause your Home Loan application getting rejected. Your credit score is dependent on your repayment histories like your credit card bill payment or payment of an already existing or any past EMIs.
2. Repayment Inability
Before granting the loan, the lenders do a background check regarding your income and your ability to repay the loan. If you are found to be a defaulter, who cannot repay the loan, your loan application may get rejected.
3. Fault in Requisite Documents
If the necessary documents and papers asked by the lender are found to be incomplete or incorrect, your Home Loan application will get rejected. To avoid such circumstances, you can make a checklist of the documents required for Home Loan.
4. Liability for Ongoing Loan
If the applicant is already has a loan over his head to repay, the lender may deny giving the new loan. A new loan will be a financial burden on the applicant and may cause an inability to repay. If you are considering your partner’s income for loan repayment, it’s better to make him/her the co-applicant to make the lender aware of the joint income.
5. Not Abiding by the Lender’s Terms and Conditions
Any loan process has a set of terms and conditions that are necessary to be met by the applicant. The loan application may get rejected due to a conflict with the terms and conditions of the loan. So, read all the terms and conditions of the loan document thoroughly.
To get the Home Loan at ease, you must check the required documents and use various loan calculators like Home Loan EMI calculator, Eligibility calculator, and Foreclosure calculator. These calculators will help in estimating your EMIs, your eligibility for the loan and foreclosure charges.
List of Necessary Documents
You will need the following documents to apply for a Home Loan:
- Your KYC documents
- Your address proof
- Your identity proof
- Your photograph
- Form 16 or latest salary slips (for a salaried individual), or profit and loss, and ITR documents (for a self-employed individual)
- Your bank account statement of the past six months
- For a businessman or self-employed individual, a document for proof of business, of a minimum of 5 years is necessary.
The Bottom Line
Now that you know the reasons for a Home Loan application rejection try and avoid making any mistakes at the time of approach. Make a checklist of all the documents required and use the Home Loan calculator before applying for the loan.
Happy Home Loan application!