Main Reasons Why Home Loans Are Rejected
You’ve passed everything: your current payslip, your employment record, your credit history. Everything! But why home loans are rejected in the first place?
First of all, the lender must be able to learn that you are financially stable enough to pay for the home loan in the long run. If they see something in your application that says otherwise, then you will really have a hard time getting one. Here are some factors that affected the lender’s final viewing of your home loan.
Bad credit score
Lenders and banks look closely at your credit score. Your reports maintained by the major credit banks are used to determine whether you are worthy of getting a home loan. Learn what you can do to repair any problems by getting copies of these reports to. The bank might have overlooked some factors. It’s possible that the reports contain errors that can be corrected.
Your entry level job may not be able to impress the lender. Your lender may reject your application if it looks like you lack enough income for the amount of loan that you are seeking. In such cases, you may inquire about making a larger down payment. Or better yet bringing in a co-signer, such as a relative, with solid credit and enough salary.
Too much debt
So you also have an auto loan and a personal loan going on. Of course, with such bills, how can the lender be sure that you’ll be able to pay on time? The lender may decide that your current debts are too great and to add a home loan may cause you bankruptcy. If you have adequate savings, consider paying off some or all of your existing debt before reapplying for the loan.
Lenders also take a look on your employment stability and certain banks have even made it mandatory that the applicant needs to be employed with a particular company for three or more years to be eligible to get a loan. The banks may will also look at the stability of the company that you’re working for while processing a loan application. So, it is highly advisable that the applicant stick to a particular job for a minimum period of a year to get the loan sanctioned.
Banks no longer fund for old developments
For the safety of the people, some banks will not fund old properties especially if the property is more than 20 year old. The criteria of the age of the building can differ in different banks. But, the bank will always consider the land value of the property. One can negotiate for a lesser loan amount by adding in some form of security and one can also increase the down payment to get the loan sanctioned. You can also look for other properties. New developments may a bit pricier but its freshness can be good in the long scheme of things. Go on and search for a new baby now!