A home loan is one of the finest ways to get the money you need to buy a house. Because a home loan is so substantial and has such a long term (20-30 years), lenders conduct extensive due diligence before approving loan applications. Your home loan application is approved based on a number of variables. They can include everything from your income to your current credit score to prior loan commitments, documentation, and other concerns about the house you’ve chosen. In general, getting a home loan in India is simple if the applicant has all of the necessary documentation and strong credit history. A home loan application may still be rejected by a bank. If the lender isn’t happy, he or she has the right to refuse your home loan for any reason. This could lead to dissatisfaction and derailment of your objectives. However, having a solid understanding of what it takes to succeed following a loan grant denial may be beneficial. To begin, it’s critical to comprehend why your previous home loan application was denied so that you may focus your corrective actions on that issue.
Evaluate your credit score
Any loan acceptance or denial is heavily influenced by one’s credit score. As previously said, a home loan is a large-ticket, long-term investment. Lenders prefer to lend to those who have a credit score of at least 750 since they know they will be able to repay their home loan EMIs on time. Use a home loan calculator to calculate the EMI before applying for the loan. If you haven’t checked your credit score before asking for a loan, now is the time. Get your free credit report and, if necessary, advice for improving your credit score.
Consider applying for a house loan again if your credit score improves. It’s also conceivable that the credit report contains errors. Take immediate steps to correct them, and your credit score will quickly improve.
Lower your loan amount
A home is frequently a long-term investment. As a result, you always want to get the greatest one, even if it means going over budget. You may be okay with roughing it or depleting your money to buy your dream home, but lenders do not share your concern.
Every bank has its own lending policies in place that help them assess the best amount to grant for each loan application based on your credit score, prior loans, income, and other factors.
EMI payments should not account for more than 40% of your net revenue. Applying for a lesser loan amount so that the resulting EMI is well under the prescribed limit might improve your chances of getting your home loan approved.
Pay off existing loans
A home loan will be a burden on your finances if you already have too many loans. Before reapplying for a home loan, take a look at your current loan and credit card portfolio. You run the risk of having your application refused if you already have too many debts in relation to your income. Your income and previous loan EMIs are crucial factors to consider. On this premise, the lender may have denied your application. Before applying for a high-ticket loan like a home loan, take some time to pay off any existing loans with higher interest rates.
Consider adding a co-applicant
If you’ve been turned down for a home loan due to a low credit score, a greater loan amount, or servicing too many loans, adding a co-applicant could help you get approved.
Including a co-applicant on your loan application gives it more weight. The applicants’ combined income will be examined, which will help your application. As a result, larger loan amounts should not be an issue.
When approving a loan, the credit score of the co-applicant is also considered. If your spouse has a higher credit score than you, your loan application may gain brownie points. If your previous application was denied, reapplying with a co-applicant may be advantageous.
Property approval issues
Before you apply for a home loan, double-check that the property title you’ve found is clear and meets the local government’s requirements. This is because any errors or inconsistencies could result in your housing loan being rejected.
However, with the introduction of the Real Estate (Regulation and Development) Act 2016, new projects are being launched with RERA approvals, reducing lender rejections on this basis.
If your previous denial was due to a lack of property documents or approval, we recommend that you double-check that the property has a clear title and all necessary approvals.
Before you submit your application, be sure you have a strong credit score, the proper documentation, and that your income and other requirements are met.