5 Reasons Why Your Home Loan Application May Get Rejected

Be aware of the common reasons that may lead to the rejection of your home loan application by a lender

Buying a house is much more than just selecting a suitable property. It usually is the biggest financial deal of one's life. Being able to arrange finances for purchasing the house without letting other responsibilities get affected is one of the biggest challenges that one may face. This is where?home loans?can help.

However, securing a?home loan?may not be easy if you do not follow the right processes. Lenders do multiple checks on you before they accept your?home loan application. From these checks, if they find even a single reason that makes them feel you can't repay your loan they will reject your application. In this blog, we list five such reasons that contribute to?home loan rejection.

Understanding the common reasons for rejection of home loan applications

1. Existing liabilities

Your existing loan liabilities can reduce your home loan eligibility. These liabilities can also be a key?reason for your home loan rejection?as you are already paying EMIs of other loans, which can reduce your repaying capacity for a?home loan. So, before you initiate a?home loan application, you will need to inform your lender of other loans you are repaying-be it a two-wheeler loan, four-wheeler loan, education loan, or a personal loan.

This helps the lender analyze your loan-to-income ratio. Ideally, the ratio, factoring in all the loans taken, including the?home loan, if sanctioned, should not be more than 50% of your monthly income. Not to forget, based on your CIBIL report and bank statements, the lender will identify the loans you have already borrowed and whether or not you are clearing debts on time.

Therefore, you should apply for a?home loan?only if you have the bandwidth to repay it easily. If you plan to consider your partner's income, make them a co-applicant so that the lender knows about the repaying capacity and joint income, thereby helping to increase the home loan eligibility and the processing of your loan swiftly.

2. Incomplete documentation

When you submit a?home loan application, it is extremely important to produce original and precise documents like age proof, income proof, and property documents among others as stated by the lender. In fact, a?home loan?is granted mostly on the basis of the documents you provide.

If you fail to present the necessary documents as mentioned in the loan application form, the lender can automatically reject your application. A good way to safeguard yourself in this scenario is by seeking a list of documents from the lender in advance and crosschecking with your documents before submitting them.

3. Job instability

Switching too many jobs is an indicator of unstable income, which reflects poorly at the time of submitting your?home loan application. Lenders consider job stability as an important condition to sanction a loan for buying a house.?NBFC s and banks prefer if the applicant shows ongoing steady employment at a company or firm to be eligible for a?home loan. If the applicant's company of employment has a reputation-related issue or is unstable, the lender may claim it as a?reason for home loan rejection.

4. Signature or address related issues

These are possibly the most overlooked mistakes that can lead to the?rejection of a home loan. Signing your documents using the same signature as in the attached documents is important when initiating your?home loan application. The signature on the application form must not only match the document copies but also the documents of the registered bank. Similarly, when the lender sends a representative to verify your existing home and office address, they expect to find both these locations correct as stated by the borrower. If any differences are recorded, the lender holds the full right to deny your?home loan application.

5. Property-related issues

The lenders check if the property, especially the building, is approved by local authorities. If it fails to meet the guidelines as suggested by local authorities, the lender may reject the loan. Similarly, if the property location does not come under the lender's policy or funding area, your chances of getting a?home loan?sanctioned are low.

In simple words, getting your?home loan application?approved is in your control. Before submitting the application, you can even use a?home loan eligibility calculator ?to understand the loan amount you are eligible for.

Most importantly, keep all the documents that you would need to submit to the bank ready and keep in mind the factors that lead to home?loan rejection.?DMI Housing Finance ?facilitates the best offers on?home loans?and a range of other financial products. So, whether you need a?home loan in Mohali ,?Karnal ,?Kanpur ,?Kota ,?Bhopal , or some other town or tier 2/3 cities, DMI can provide the required financing.

You can use our?branch locator ?to find a branch closest to your location. If you want to apply for a home loan online, you can visit the?DMI customer portal ?today and choose a loan plan as per your requirements. For any questions, you can also call us on?011 - 66107107 ?or write to us at [email protected]. For a new home loan, you can also give us a missed call on 9772027704.

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