8 Reasons why your Home Loan Got Rejected

8 Reasons why your Home Loan Got Rejected

Are you disappointed and confused why your housing loan got rejected? Well, don’t worry we have got the answers for your question. In some cases, banks do reject home loan applicants for a wide variety of reasons. They may or may not mention the exact reason. We are listing out all possible reasons why your home loan can be rejected. It is wise to go through them before applying for a loan.


Poor Credit Score

Banks and financial institutions in India have developed a method to track your credit history. This information is freely available for lenders to verify when you apply for a loan. If you have defaulted on previous loans be it either housing loan, personal, loan, credit card payments, everything will be reflected in the credit score. If this is bad they might reject your loan application. The best thing to do is to check your credit score in advance before applying for a loan.

home loan

Unapproved Builder/Project

Each and every builder have tie-ups with different banks in your city. If you apply to a different bank, they might reject your application. Consult your builder and get to know which bank has pre-approved their project. This will save you a lot of time and effort. You might also end up getting a small discount in processing fees.

Over-Valued Property

It doesn’t matter at what price you and the seller have agreed for the property. Banks have their own professional visiting your property and doing their own due diligence. If their valuation doesn’t match they will not approve your loan. In some cases they might sanction lower amount.

Age of the borrower

Age of the person applying for the loan also matters. If you are young and have a long career ahead, you have a higher chance of getting approved for a housing loan. If you are more than 40 or nearing retirement, the chance of getting a loan is less and might lead to rejection.

Type of employment

If you are a salaried working professional either in government or a reputed private institution then your chance of getting approved is higher. If you are a self employed professional, few banks have a policy to reject the loan. Your loan might be rejected if you are not a permanent employee in your organization.

Frequent job hopping

Stability in a job provides stable income and steady growth. If you frequently change jobs for a variety of reason, banks are not comfortable in sponsoring your home. Your application may be rejected for this purpose too.

Age of the Property

If you are buying a resale property then the age and condition of the property also plays a vital role in getting a housing loan. If the property’s age is more than 10 years they might reject your application or sanction only 50% of the loan amount.


Existing Loans

If you have already taken more than 1 loan then getting a housing loan is not easy. Eg: if you have a personal loan and car loan already running, then you are paying a substantial part of your income to these EMIs. Banks might feel that you cannot carry the burden of another EMI and may reject your loan.

The best thing to do is to check your credit score in advance before approaching a bank. You can check credit score using online portals for a small fee. Once done the next step is to check your loan eligibility with your bank.

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