A housing loan in India is one of the most appropriate options when it comes to arranging funds for buying a new house. Typically, it is easier to avail of a housing loan if the borrower has maintained a good credit score and has all the documents in place. However, sometimes, even when a borrower is mindful of these things, their chosen lender may still reject their housing loan application based on other factors. Some of the common reasons for rejection include but are not limited to the following:
- Poor credit score
- Dissatisfactory credit history, which could include a past loan settlement on the credit report
- The lender does not approve of the builder, property, or property specifications.
- The property is in a restricted area,
Your lender may have rejected your home loan application for more than one reason. The good news is by following these simple steps, you can improve your chances of getting the much-desired housing loan even after it was rejected the first time.
Do Not Hesitate to Ask the Lender
This is the best way to begin working towards what possibly went wrong: start by asking your lender why they rejected your application. Try to find the specific reason. Did you fail to meet the home loan eligibility criteria? If yes, on what grounds? Knowing answers to these questions will help you rectify your mistakes before reapplying for a housing loan. It will also help you increase your chances of home loan approval the second time.
Apply for A New Home Loan Credit That Is Within Your Limit
Borrowers must try and not give the impression that they need credit urgently as this gives banks the power to negotiate for their benefits. Further, apply for home loan only when you need a loan. More importantly, apply for a loan when you are sure that you will be able to repay the loan you have borrowed. Keep in mind that a high debt affects one’s credit scores and therefore, borrow smartly.
Monitor the Co-Signed, Guaranteed, and Joint Accounts Every Month
In the case of co-signed, jointly held, or guaranteed accounts, you are also equally liable for any missed payment. Thus, your co-applicant or joint holder’s negligence will also affect your ability to get desired housing loan credit when you need it the most. Therefore, some financial experts recommend avoiding being a guarantor or co-account holder of loans altogether.
Explore Possibilities with Your Housing Loan Provider
If you have lower financial eligibility than what is required, you can try meeting the housing loan provider to explore the following:
a. Spreading the loan over a longer tenor to reduce home loan interest rate as well as your home loan EMIs
b. Adding a co-applicant to increase the income considered by your lender
c. If you have an ongoing loan, which is of shorter duration and higher interest, then, try closing the loan. This will help enhance your home loan eligibility.
Try Requesting for Property Approval
You can try requesting your preferred housing loan lender to approve the property. If that seems unlikely to work out, you can try looking for an alternate property that stands a higher chance of getting easy approval, or changing your lender and trying for approval with another lender.
Tips to Avail of A Housing Loan Easily
- Maintain a healthy credit score to enhance eligibility.
- Reduce as many obligations as you can. This will help you have sufficient money to repay your home loan and prove creditworthiness.
- Identify a property pre-approved by your chosen housing loan lender and use it as collateral.
- Check your credit report from time to time to clear negative information, if any exists.
- Avoid making multiple home loan enquiries.
- Maintain a healthy banking record.
The Final Word
A lender issues a generic letter of rejection and does not mention the reasons behind rejection. So, request your lender to share with you their reason for rejection, and once your lender shares their reasons with you, dig deeper into details and do everything you can to rectify the mistakes you made. Whatever you do, do not give up hope. There are several lenders out there in the market and one of them will certainly agree to help you live your dream of owning a house.