Top 10 Reasons for Rejection Of Your Home Loan Application

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Buying yourself a home or planning for it is one of the biggest and most important decisions in life because it is a decision you make for your long future. With increase in properties, not everyone can buy a home or a property by paying completely from their pocket. So what to do? The answer lies in taking up a home loan. It is the best option which enables you to buy the property of your dreams. But before you apply for a home loan, you need to understand and research on how your application would not be rejected by the bank or any financial institution. We give you Top 10 reasons as why your Home Loan Application might get rejected.


  1. Rejection Of Loan By Different Banks

When people apply for a home loan, some people try to apply it in different banks at the same time. What people do not understand that once your home loan application is rejected at a bank or any financial institution, it has an effect on your credit score as well which can lead to your home loan rejection at other banks or financial institution. It is wiser to apply at one bank or financial institution and then wait for the reply or approval or rejection. This will help you know why your loan application was rejected and you can rectify that mistake.

  1. Your Address Is On The Defaulter’s List

Another reason why your housing loan application can be rejected is if you have shifted to a rented house where someone has not paid up his/her loan. Or maybe has a credit card who’s credit dues have not been paid on time and the address you reside at is in their records. This way, the address would be stored in the defaulters list with every bank. There will be a high possibility that your application may get rejected because of this.

  1. Any Unpaid Dues?

Credit card dues, late payments, EMI’s can be one of the main reasons of your application being rejected. This is a simple issue which can be resolved with a simple solution and that is to make your payments on regular basis and not delaying any deadlines.  You can always keep a check on your credit card and also subscribe to a reminder service through your bank which would help you making the payment before the due date.

  1. If You Already Have Other Debts?

Banks check for your monthly income and other ongoing monthly payments. The amount minus your payments is considered your real income by the bank or any financial institution. If you have more than one debt, then availing another loan would be difficult for you to pay. This means that the bank can reject your application.

  1. Guarantor To A Loan Defaulter?

When you sign up as a loan guarantor, it comes with a responsibility. It means if the person who applied for the loan fails to repay the loan amount, then you would be responsible to repay on their behalf. You should not rush into signing anywhere unless you are completely sure of the person’s repayment capabilities.

  1. Your Own Repayment Capabilities

One of the main points that banks have make sure before processing the loan application is to understand your loan repayment capabilities. It depends on the amount that you save monthly after paying your dues or EMIs. You should make sure that you have a good repayment capability so that in case of an emergency, you still have the capability to not fall short of your EMIs and become a defaulter.

  1. Age Can Be A Concern

The banks or any financial institution would be a little hesitant if you would be coming near to your retirement age. This is due to the act that you will not be having any loan repayment capabilities after some years. Some banks may offer you short term loans but that would be difficult for you as the EMIs would be too high and be a burden on you. So, the banks may reject your home loan application because of your age as well.

  1. Have You Switched Jobs Too Often?

This reason is one which many people do not understand. People do not realize that jumping or changing jobs quite often reflects in a bad way on your home loan application. Banks or financial institutions strongly look for job stability. This helps your loan application, as working at a reputed organization helps the bank make the loan approval easier. You should be working for at least 3 or more years to be eligible for a home loan. If the bank thinks that your organization’s future is not stable, then they have the right to hold the application and reject it. Hence, job stability is also a very important factor by any financial institution or bank.

  1. How Good Is Your Credit Score?

One of the most important factors when a bank is sanctioning a loan is looking at the borrower’s credit score. It is very important to have good credit score before you go and apply for a loan. A god credit score lies between 700 to 850. It can be attained by paying your credit card or due payments on time and on regular basis.

  1. Do You File Your Income Tax On Time?

Before you apply for a home loan, make sure that you file your IT Returns on time even if you do not get Form 16 from your employer. It always helps when you apply for a home loan as you would be having a clear record of your tax returns for the past 2 years.


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