Home Loan Application Rejected? Here's What You Should do

Home loans can help you achieve your dream of owning your own home. However, it can be very disappointing if your loan application is rejected. Keep reading to know some of the reasons for your home loan rejection and what you can do about it.

Home loan rejection can put you off your plans of owning your dream home. However, not all is lost if your loan application is rejected. It simply means that you need to sort out a few things before you can apply for a home loan again.

There can be many reasons for the rejection of a home loan application. Here are some of the common reasons and what you can do about it.

1. Low Credit Score
   A credit bureau gives you a credit score after studying your credit history. Lenders usually prefer a credit rating above 750. Anything lower than this score may indicate poor credit handling by you. What Can You Do?
   Repaying your debts on time can help you maintain a good credit score. Also, if you spot errors in your credit report, get them rectified at the earliest.

2. Unstable Income
   Lenders prefer individuals with a stable income. If you make frequent job changes or indulge in seasonal occupations, then your loan application can be rejected. Banks usually evaluate your income stability by looking at your bank statements, employer records, etc.

   What Can You Do?
   A stable source of income can settle the scores in your favour. If your occupation doesn’t allow you to have a stable income, consider adding your spouse as a co-applicant with a more stable income.

3. Incomplete Property Documents
   Home Loan is disbursed against the mortgage of property documents. If the home loan documents are incomplete, then your home loan request will get rejected.

   What Can You Do?
   Ensure that all the property papers are complete before applying for the home loan.

4. EMI to Income Ratio
   Lenders accept a maximum EMI of 50% of your monthly income. This means that the sum of EMIs for all the active loans cannot exceed 50%. Therefore, your home loan eligibility can be badly hit if you already have active loans and your EMI to income ratio exceeds 50% after calculating the new EMI.

   What Can You Do?
   Always repay any pending loans before applying for a new loan. This can help you increase your eligibility considerably.

5. Your Age
   Since a home loan is for the long term, having age in your favour can improve your loan approval chances.

   What Can You Do?
   Apply for a home loan at a young age to improve your chances, or consider adding a co-applicant.
   It is sensible to check the above factors before applying for a home loan. You can easily check your home loan eligibility online. If your application has been rejected, you should also ask the bank for the shortcomings in your application so that you can rectify them.

    

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