04 May 2011
My Home Loan Application was Rejected.
We hear sometimes that your home loan application was rejected and you wonder that the person is financially well balanced and working then why did the lending institution not accept their loan application?
Firstly the individual concerned may be of higher age group and the lender will assess their retirement age and working years left and accept applications according tot heir repayment capacity in this productive period only. If the borrower is of more age then they must have assets to cover the loan amount then the chances of approval are more but if the person concerned has not much savings or property then the lender is not willing to risk such a high amount as they fear of default in repayment. When the applier of loan is very young then also the same questions erupt in the mind of the lender. They will see your qualifications and if you are highly qualified and have a high paying job then your chances of loan approval are much more than your counter part, who may be averagely qualified and has a clerical job. Also the amount you have applied for must be such that you can easily repay through your monthly incoming income and salary. If you have more dependents and your salary is going more in regular expenses then how will you save and the lender is very critical about your repayment capacity. They will go through your credit card report and your bank statements and if there are any dues or delayed payments then this again creates a negative point for your chances of loan approval. It is advisable to first decide the budget for your new home and apply for that amount other wise if you apply for a very large loan than your repayment capacity then your application will definitely be rejected.
Now another important point which we forget is if you have many ongoing loans. Even if you are from a high income group the lender will enquire about your ongoing loans if you have maybe a car loan, insurance policies, and other investments that require regular payments every month then how will you collect the money for EMI? Here if you have assets worth more than the lending institution may consider but if not then they will not take the risk because houses also cost in lakhs and crores and the home loan is not a small amount.
Whatever the reason for your loan rejection, plan accordingly for approval. It would be advisable to create a new credit account and improve your credit ratings if this was the reason for rejection. Try to start saving as much as possible and this require patience and effort for some years before applying again. Also accumulate assets and club investments so as to minimise regular monthly outgoings. Try to clear off as many loans as possible before applying for a new home loan. All the Best!