How to ensure that your home loan is not rejected

You have applied for a loan to buy your dream home. But don’t be complacent and do your homework well before sending your loan applications to a bank or home finance company. You will do well to avoid the following pitfalls that may lead to the rejection of your home loan application:

Compulsive job-hopping:

Nothing wrong with switching jobs but it should not happen in a quick succession. Home finance companies generally prefer an applicant employed with a particular concern for at least a year.  For them, job stability is a crucial consideration while sanctioning home loan. In the case of senior professionals, a longer stint with their employer is definitely a plus point.

Negative profiling:

Sometimes, a particular kind of income, Credit Information Bureau Limited (CIBIL) score and geographic areas are not found to be appropriate for lending as per the internal policy guidelines of home finance institutions. But try to find a way out to wriggle out of this situation. You can consider providing additional security which may include a guarantor, insurance policies, fixed deposits, collateral securities etc.

Old property:

If the age of the residential unit you intend to buy is more than 20-30 years old, the lending institution may not favourably consider your home loan application. But if the house property you are buying also includes the plot area, the chances of your home loan’s acceptance may brighten up.  Ownership of land is always a favourable criterion for funding property purchase. And, if you are in a position to increase the down payment from your own funds, it will enhance your loan prospects.

Past Rejections:

With e-governance being the norm today, electronic database of all data is maintained, including all accepted and rejected loan applications. Your application may have been rejected in the past for some reason or the other. Don’t lose hope, you may still take up your case with the financing institution, explaining positive changes in your profile, income etc., over the years.   Also, do not depend on any single home finance institution, but apply for a loan simultaneously with a number of such companies to brighten your chances of availing home loan.

Defaulter’s house:

Sometimes, you may be confronted with a situation where your current residential address may match with the one on the defaulters list as the previous occupant/your relative may have defaulted on a loan payment or credit card dues, with his/her case reported to the CIBIL. No reason to worry. You may take up this case with your bank and explain that it is just a co-incidence.

Best of luck for your home finance efforts!