Applying for a home loan is a long process, involving various eligibility factors such as age, income, loan tenure, credit score, LTV ratio, etc. You may think that a handsome salary, a high credit score, and a permanent job position can increase your chances of home loan approval, but it cannot be far from the truth.
A lot of borrowers remain unaware of the various home loan eligibility criteria, which are some of the major reasons behind the rejection of home loan applications. They are as follows:
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Stable employment is an important factor in determining your home loan eligibility. If you change jobs frequently, then your credit risk will be higher since your ability to repay the home loan interest will be lower prompting the rejection of your loan application.
In fact, most lenders demand that the applicants should have a permanent position or be employed in a company for more than three years, to be eligible for a home loan online.
A housing loan can last for about 30 years and more. Because of this, home loan applications from retired applicants or those nearing the retirement age can be rejected as applicants aged 60 or above lack a stable income source to finance the loan for buying a house.
In such a case, it is ideal to apply with a working co-applicant to enhance your overall home loan eligibility. You can easily check your eligibility by using a home loan calculator online and create a better financial plan.
Poor Credit History
Having a high credit score of 700 or above suggests high creditworthiness and a higher chance of home loan approval. However, lenders check your entire credit history before approving the housing loan application.
Any past credit dues, payment defaults on existing or previous loans, etc. reflect a poor repaying capacity and increase the lending risk, leading to the rejection of your home loan application. This is why you must always check your credit history and resolve any credit issues beforehand, to obtain easy home loans.
There are a set of documents you are required to furnish when applying for a home loan. Lenders verify and authenticate these documents via concerned local bodies to check for possible faults or variances in the information provided.
In addition to these documents, lenders verify the property that is set for purchase to determine the borrower’s creditworthiness. If the property is approved by the lender, your home loan application will have a higher chance of approval.
Even if your property is approved, your builder also needs to be approved by the lender for obtaining the housing loan. This is because not all lenders sanction home loans against the property of the builders. To avoid such a situation, ensure that your builder is in the lender’s approval list before you apply for a home loan.
The reasons mentioned above are common yet unapparent to many borrowers, which is why it is important to carefully examine all the home loan eligibility criteria before submitting the housing loan application.
Plan in advance: use a home loan EMI calculator to estimate the EMI payments for the desired home loan interest rates, loan tenure, and principal amount and increase your chances of buying a house.