6 Things That May Get Your Home Loan Application Rejected

6 Things That May Get Your Home Loan Application Rejected

6 Things That May Get Your Home Loan Application Rejected
Typically, banks keep the maximum fixed-obligation-to-income ratio for self-employed professionals at 70 per cent. (Dreamstime/Promicrostockraw)

Alok Ranjan, 38, who works as a freelancer for a media company, is planning to buy a house. He has a CIBIL score of 750+ and has been quite punctual with his credit card bill payments, etc. However, his home loan application form was rejected by the bank.

For many of us, buying a home depends on availing of a loan, as real estate requires a huge investment. You must remember that banks consider various factors before granting you a home loan. There are certain indirect reasons that could lead to the rejection of your loan application.

MakaanIQ takes a look at some of the factors that could lead to the rejection of a home loan application:

Frequent job change

While banks are more willing to grant loans to an applicant with a stable employment record, they also examine the stability of the applicant's employers to decide the eligibility. It is advisable to stick to a company for at least three years, for a smooth processing of your home loan.

Past rejections

Bank maintain records of rejected loan pleas in their database, and this information is extended to CIBIL. If your loan pleas have been rejected in the past, your bank will get to know about it and that will affect your loan eligibility adversely. It is advisable not to apply for loans unless you seriously want to avail of them.

The negative zone

Every bank has a list of areas categorised as the negative or 'red' zones. Banks reject your loan application if you reside in or the property you want to purchase is located in the negative zone. Banks also refrain from funding a property that is 25-30 years old.

Poor CIBIL score

Credit score is a significant deciding factor. A good CIBIL score brightens the prospects of getting a loan. Make sure that there are timely payments for credit cards and the running loans. You must always keep a regular track of your credit score, too.

Address on defaulter's list

Don't be alarmed, but your home loan application might get rejected if you are residing in a property that was previously occupied by a person who defaulted on his loan, or if you have rented out your property to such a person. Many banks blacklist the defaulters, as well as the addresses where they live.

Profile mismatch

Many banks consider some job profiles negative for lending. These include journalists, lawyers, policemen, etc. If you belong to any of these professions, it is advisable to provide the bank with a security in the form of a guarantor or a collateral to secure a loan.

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