Lots of people in India avail home loans as they can’t arrange the money required for making a house of their own. They are forced to turn to home loans. There are lots of obstacles that you have to face while availing a home loan. Sometimes, your application for the home loan gets rejected. It could be for any of the reasons listed below.
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The bank checks your Credit Information Report (CIR), when you apply for a home loan. Banks look at timely payments of dues and EMIs on any other loan availed. Timely payments of past loan dues may help you get the home loan sanctioned.
If you have availed other loans like a car loan or a personal loan, banks believe this will affect your repayment ability. Chances are you could default on the home loan. Banks prefer to err on the side of caution and will not sanction your home loan.
If you have moved to an address which was previously rented out to a person who had not paid his loan dues on time, you could be in some trouble. If the previous tenant or owner had given the same address in the bank records, the address could be listed in the database of defaulters. Banks might refuse to sanction your home loan.
SEE ALSO: Tips to apply for a home loan after 45
Instability in your job or frequent changing of jobs, can affect your loan approval. Job stability is one of the most important criteria banks check, before sanctioning your home loan. Banks insist that the borrower should be employed in a particular firm or company for a continuous three years, in order to be eligible for a home loan. If the bank suspects you of being a job hopper, the bank has all the right to reject the home loan application.
Application for your home loan can be rejected if you are close to retirement. The lender is hesitant to offer loans to such borrowers as repayments could stretch beyond retirement. However, some banks may be willing to offer home loans of a shorter tenure. EMI can be really high if you take short term loans for huge amounts. Therefore, borrower’s age also plays a crucial role when applying for a home loan.
Being a loan guarantor can sometimes be risky. Before standing a guarantor, check if the person you stand guarantor to can make the loan repayments in time. If you suspect this person cannot make the repayments in time, do not stand guarantor to his loans. If the borrower defaults in the repayment, you will be held liable to repay the loan on his or her behalf.
Having a good credit score plays a significant role in getting your home loan approved. You should ensure you have a good credit score (CIBIL Score) when you apply for the home loan.
If you apply for the home loan at many banks, chances are your home loan application will be rejected. Banks think you are credit hungry and will not sanction the home loan. Therefore, it is best to know the results of a home loan application from one bank, before applying to the next bank. You will be able to correct your mistakes and not repeat the same errors while applying for the second time.
It is important to file your income tax returns (ITR) each financial year, whether or not you receive the Form 16 from your employer. Lenders and banks check if you have filed income tax returns of the last two years, before approving the home loan. Be Wise, Get Rich.
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