6 reasons that may lead to your home loan rejection


Home loan rejection is very painful. Imagine a scenario where after years of research and waiting you finally zero in on your ideal home. You see everything matches perfectly and apply for a home loan awaiting the wheels of progress to turn. The builder is, after all, a reputed one and you not have a high-paying job but also have never defaulted on any loans.

So, there can be no way that there will be chances of your home loan rejection. Or your application will not get approval. But then when you wait in muffled anticipation mixed with boiling excitement, and you get the news. Everything ruins as you get the sad news for your home loan rejection.

But why, what went wrong?

When you will deep dive into the reasons for your home loan rejection, you may find that nothing wrong with your application. Something relating to project or builder eas the culprit. So let us discuss a few uncommon reasons that may result in your home loan rejection.

1. Unapproved builder properties are liable for home loan rejection

This is a common yet often unexpected reason for refusals of home loan applications. You must understand that not all banks allow loans of all builders. Thus, it is therefore imperative for the builders themselves to know which banks approve their building for home loan grants and which do not.

It may so happen that when you approach a housing finance company or a bank for the home loan, you may discover that the particular building in question is not approved by the organization. This will put you in a difficult situation as it may get difficult to get a loan approved by the same organization at a later incident as well.

So, always make sure your builder is approved by the banks or home financing organizations of your choice. This you must ensure before finalizing any property.

2. Even if a builder is approved but the build is not, your home loan will get rejected

This is another unexpected curve in the process of obtaining home loans. Here, the builder may make it to the bank’s list of approved builders. However, the particular building project or different phases of the build (if it is a large one) may not be approved. This may be due to some discrepancies or others.

Hence, to avoid unexpected home loan rejections it is always a good idea to check up on the background of not only the builder alone but also the specific project you are planning.

3. Rejections related to valuation of the property

If you are planning to purchase a property in the resale market and the seller, as well as the buyer, have agreed on a certain price. Then the buyer decides to get a home loan for financing the purchase. But the bank here will offer loans based on the market valuations and not on the determined price by the property buyer and seller.

Now it will be all fine if the valuation of the property is higher than the price determined. But if the price is lower than that of the price determined then the bank may only offer a lower amount as a loan. This is according to the market valuation of the property. In worst case scenarios they may even reject the whole application for the home loan.

4. Issues with your credit history

This is the most prevalent reason for rejection of loans. And many people remain completely oblivious of their credit score thus, leading to such unexpected surprises. So, make sure you keep proper tabs on your credit score and maintain a discipline towards repayment of bills.

5. The particular property is in the defaulter’s list

It may so happen that the previous tenant occupying the property was a defaulter. This may lead to a reading listing of the property by the housing finance company. Also sometimes the locality of the property is often not in the good books, so choose accordingly and research well.

6. If your unemployment is unstable:

A lot of banks and financing organization emphasize on the stability of the employment. Some even have conditions that an individual must have a job for three consecutive years respectively. Only this makes them eligible for a home loan.

These were some of the reasons for unexpected home loan rejections. Despite having the perfect home, builder, deal or credit score, your loan might get rejected. So, you need to prepare accordingly. Look for such loopholes before you make up your mind to buy any property.

Besides having a good credit score and ok from paperwork side you also need to check the creditability of builders and the conditions of the property. Only then you will get insurance that nothing comes in between you and your dream home.

If you need any assistance in selecting a property or availing various financing options you can visit Money Dial for more updates on Banking and Finance. We will help you with a trustworthy home loan advisor that will assist you in finalizing your dream home.


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