Failed to Get a Home Loan? Do Not Despair

After a long wait and an arduous search you finally found your dream home and are excited. Unfortunately, your loan application was turned down and you have no idea of the reasons for it. Stem the feeling of disappointment and roll up your sleeves and get down to resolving the problem.

Reasons for Rejection: The reasons for the rejection may be many and may be something you were not aware of. In fact banks frequently reject home loans applications for many reasons. Some of the main reasons may be the following:

1. A poor Credit Score

2. A bad history of loan repayments

3. Too many previous loans and too little income

4. Loan guarantor to someone who did not pay back

5. Project is not on the approved list of the bank

6. Inadequate employment history or frequent job changes

7. Loan amount is beyond repayment capacity

And there may be many more reasons. However, do not despair. All is not lost. The rejection notice of the bank may not state the reasons for the rejection, but it is possible to find out by asking the bank to specify the reasons.

How to Improve your Chances:

• You should do a complete overhaul of your financial health. Get your CIBIL score and report by requesting it from CIBIL, for a nominal charge. Look into your history and try and rectify those areas which may be smoothed over by positive intervention. You may pay off any outstanding amount on a credit card, personal loan etc. If you have already paid a loan and it is still reflected as outstanding, take steps to get a certificate from the lender stating that the loan has been paid up and approach CIBIL for removal of the negative score.

• If you have too many loans running simultaneously, transfer all of them to any one lender who may offer you a better deal and avoid any more loans till you have paid off the outstanding. This will help repair your CIBIL score.

• If you have stood guarantor for a person who has not paid his loan, persuade him to pay up or have him delete your name and replace it some other person with the permission of the bank.

• If the project is not on the bank’s list of approved projects, find a bank which is amiable to lend on it. If there legal problems of the project, change your choice and apply again.

• If you have lower loan eligibility, you may meet the lender and explore the possibility of taking a loan for a longer duration thereby reducing your monthly repayment installment. You may also improve your chances by including a co-applicant and/or a guarantor, who has a steady and adequate income. Some banks may accede to your request but on a higher rate of interest, which you can consider with the option of reducing the rate of interest later when your ability to pay a larger installment increases.

Experts in the field of banking and realty advise home loan seekers to be very diligent in maintaining a clean and balanced financial history as the opposite has the potential to jeopardize your chances of getting a home loan, thereby hindering your efforts to finance your home. “Keep your credit history clean, by settling outstanding loans and bills in a timely fashion. This will help you when your credit worthiness is being evaluated. Compare the long term benefits of having a floating rate loan versus a fixed rate loan and determine what is best for your needs,” advises Adhil Shetty, CEO Bank Bazar.com.