Be Money Aware

You finally made up your mind to apply home loan to make your dream of owning a home, a reality. You also ensured that all paperwork is in place as required for home loan eligibility. But, alas, your home loan got rejected. Certainly, it will be a disappointing moment for you. But, don’t lose hope, instead, try to gather details of what went wrong and then rectify it to get an approval in the second attempt. Here are few steps that can be taken when your home loan gets rejected.

• Find out why the loan got rejected – There can be various reasons for denial of a home loan, hence it is required to know the exact reason. Usually, the letter sent by the bank may give a generic reason for rejection of the loan. In such a case, contact the concerned officials and try to gather precise details for rejection. This is a necessary step and it will help you prepare better when you apply home loan
• Reduce the loan amount to match your repayment ability – Loan repayment ability is one of the major considerations before approving a loan. So while assessing home loan eligibility, if the bank feels that your monthly income is not sufficient enough to support repayment of the desired loan then there is a possibility of rejection. In such a case, try to rework on the desired loan amount based on your monthly income and repayment ability.
• Don’t have any debts – When you apply home loan, banks will do a thorough check to assess if there is any existing debt in the form of earlier loans repayment, bill payments or any other dues. If your debt rate is high then in most cases the bank will deny approval for the present loan application. This is so because, with the current loan, your debt will multiply. Hence, you must make sure that you clear off all debts before applying for home loan.
• Score well in CIBIL – CIBIL score is one of the important factors that banks look into before deciding on a home loan. CIBIL score and CIBIL report provide an insight into your credit behaviour. This means that delay in repayment of prior loans or delay in clearing off dues have a negative impact on the CIBIL score and a poor score is most often the main reason for home loan rejection. Thus, it is important to maintain a CIBIL record and also seek professional advice on how to improve it. The sooner you pay heed to your CIBIL score the better it is for you.
• Consider other alternatives – The main factors that get considered while calculating EMIs and repayment ability are loan amount, the rate of interest, and loan tenure. And, these factors become the deciding factor for home loan approval. Well, for the EMI to be worked out to suit your income either the loan amount can be decreased or the loan tenure can be increased. Aside from these alternatives, the other possibilities could be to find another property that is more affordable or search for home loans from other bank or housing finance company where you could get a better interest rate. Basically, don’t give up without attempting various alternatives.

Whether you apply for a home loan online or offline, rejection of it is definitely not a pleasant turn of events. However, the key lies in understanding the various requirements of the bank or lender to approve the home loan. Along with financial discipline, it will also need you to be cautious, patient, and well-informed about the terms and conditions of the home loan. And, the above-mentioned factors will help you get your home loan sanctioned.