Securing your dream home is indeed one of the most exhilarating moments in life. The purchase is not only a way of settling in your comfort pad but is also a great mode of investment. Real estate is an asset that promises the most lucrative long-term returns. All things well, an important criterion of getting the home of your dreams is availing a good value home loan.
Home loans are widely offered by leading lenders and truly smoothen the process of owning your property. While the steps involved in getting a home loan seems simple, it is imperative to stay on guard when applying for one. Lenders primarily review your credit score and income, however, there are several other aspects that you must note. Lack of attention to the nitty-gritty can lead to your home loan being rejected.
Read on to some of the lesser-known but important factors that could lead your home loan application to get rejected.
Age of the Applicant: If you are a younger applicant, it essentially means that you can service your loan for a longer tenure. The eligibility of your loan is directly impacted by your loan tenure. A longer tenure also aids to bring down your EMI. If you are an older applicant who is nearing retirement, then the loan tenure reduces while the EMI increases. If the calculated EMI is higher than acceptable, your home loan application is likely to be rejected.
Inaccuracies in the Application: It is extremely important to furnish all the right information when filling your home loan application. Inaccurate data pertaining to your age, name, addresses, employment and more make it difficult for the lender to validate the details. This can ultimately cause your home loan application to be rejected.
Disapproval of the Property: If a lender does not approve of the property against which you are seeking a loan, this may lead to a rejection of the application. Lenders typically have specific types of properties that they prefer. If the home does not have value owing to the location of the property, poor building condition, and more, it raises concern about the potential resale value. A lender will only approve of a home loan when the property promises a good value in the future in case of default on part of the borrower.
Unapproved Property: Lenders carry out an independent check to ensure that the property is approved by the local governing bodies. If it does not meet the guidelines as specified by the local authorities, there is a high chance of the loan getting rejected. As part of your loan application, the builder or property developer’s background too is well scrutinized before the home loan application is approved.
Multiple Home Loan Applications: A very common practice among home loan seekers, multiple applications can severely affect your loan approval. This is because it reduces your credit score and makes you appear like a desperate borrower. Several applications may also be considered a red flag as authorities may think that you are making multiple purchases. Thus, it is best to steer away from multiple home loan applications during a given period.
Unstable Employment History: Lenders do not prefer to risk lending to an individual who poses to be an unstable employee. Suppose you have applied for your home loan with an offer letter from a new company but provide payslips from your previous company, it raises red flags. A financial institute always prefers an employee who has been employed for longer tenures as opposed to someone who has switched too many companies.
A rejected home loan application can be disappointing. However, you must understand that it is a massive amount of debt. Should you bite a larger chunk off more than you can chew, it will only lead to putting yourself and the lender into a trap. To avoid the risks, ensure that you calculate home loan EMI by using the free Finserv MARKETS home loan EMI Calculator.