There are various home loan plans to choose from when you are planning to buy a house. Ideally, a home loan plan covers 80-90% of the property value, depending on its cost. Now, before speaking to a lender to apply for home loan, it is important to be aware of the eligibility criteria that they have set. This is because there are cases where the applicants are rejected by lenders for not fulfilling the eligibility criteria for a home loan.
Multiple application rejections are not a good sign for any financial institution that is deciding whether to give you a loan. This is why it is so important to be aware of the most common reasons for lenders rejecting home loan applications.
- Poor employment record
Your employment record displays your ability to repay the home loan. If you are frequently changing jobs or do not receive a regular income, it might not look well on your loan application. Working for a well-known company and steadily receiving a monthly salary shows consistency, which is considered as a good employment record.
- Unpaid dues
Before applying for a housing loan, it is always advisable to not have any outstanding debt. If you are already paying off an existing loan’s monthly instalments, it would be difficult to take on another loan at the same time. This is one reason why lenders might reject your loan application.
- Bad credit score
Lenders prefer borrowers who have maintained credit scores of 750 or above. Bad credit scores are a result of defaults on payments, which is a negative sign for a lender. Even if they do approve the application, there are high chances that you would get stuck with a high home loan interest rate. To get the best deal on your home loan plan, make sure to first improve your credit score.
- Old property
Many people are not aware of the fact that lenders even evaluate how old the property is while reviewing a home loan application. A lender might have to review the chances of a structural collapse in case the property is very old, which includes legal as well as technical investigations. If the lender is not satisfied with the property review, they might reject the home loan application.
- Incomplete documentation
Any lender is going to thoroughly check an applicant’s documents before approving a home loan. If they find any inaccuracies, they can reject the loan application. This is why it is so important to check with the lender regarding the documents required for home loan. This will help ensure that the entire loan process goes smoothly.
By being aware of the home loan eligibility criteria of a lender, you are in a much better position of getting an approval. Please keep in mind that the eligibility criteria differs from lender to lender, which is why it is considered best to speak to one about their requirements before submitting your loan application.