Reasons That May Lead to Home Loan Rejection by a Bank

 

There are many financial decisions that people have to take during their lifetimes. Of these, perhaps buying a home is one of the biggest and costliest decisions. The exorbitant prices of apartments put them out of the reach of many middle-class families. But fortunately, home loans make it possible to purchase the home of your dreams. Though a home loan is a very practical solution, some homebuyers can be left frustrated when their loan is rejected by a bank.

 

There are numerous reasons for an application to be rejected. So, if you are planning to buy seaside apartmentsin Goa, here are a few things that you should keep in mind to prevent your loan application from being rejected. 

 

Credit score 

 

A credit score plays an important role in the acceptance or rejection of one’s home loan. When a person applies for a loan, lenders will ask for their credit report. A credit score lower than 750 points can result in your loan getting rejected. To avoid a low score, make timely payments on your credit card and other EMIs. A credit score above 750 points is considered good and will help you easily get a home loan.

 

Unstable income and employment 

 

Job hopping is an important part of a person’s professional life. But if you change jobs too frequently it can affect your home loan application, even leading to its rejection. Since home loans have long repayment tenure — between 20 and 30 years — unstable employment or income will create uncertainty with the bank about your loan repayment capacity. Some banks specify that the borrower must be employed with their current organization for a minimum of three years for the loan to be accepted. 

 

Age of the borrower 

 

It becomes increasingly difficult for a person who is on the verge of retirement to get his or her loan accepted. Banks take the age factor seriously and reject the loan if the person is a few months or some years away from retirement. The borrower’s income will diminish post-retirement, creating uncertainty among the banks and lenders regarding the person’s capacity to repay the loans. However, you can still avail of a loan if the bank is offering a short-term home loan. 

 

Filing of income tax returns 

 

If you are planning to apply for a home loan but have not been filing your income tax returns regularly, there are high chances that your home loan will be rejected. Banks and other lenders approve the loan only if the borrower’s income tax filings are clear. Before giving the loan, the bank will take into consideration the tax filing record of the past two or three years. 

 

These are just a few reasons that may lead to the rejection of your home loan. There are many others like incomplete documentation; the bank may not approve the builder, previously rejected loan applications, debts, amongst other reasons. So, before you apply for a 2BHK in Bambolim, Goa, built by top developers like The Dynamix Group, make sure that you meet all the criteria of the bank. This will make sure that you get the loan without any hassles. 

 

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