The loans are an integral part of the home loan process. The loans can be taken for the home loans by an individual while having a proper source of income only. There are multiple reasons for the home loans getting rejected, like the poor credit score, insufficient income to pay higher amount of loans, false or incomplete documentation, not having a proper source of income, no ITR returns statement. Also, hiding the actual income generated in black can lead to the rejection of loans. The banks charge interest rates starting from 6.50% onwards per annum. The loans can be availed for a maximum tenure of 30 years. The age criterion is another factor for the rejection of loans. Banks usually reject the loans for the people who have higher age or lesser retirement age of the service. The competitions amongst the lender are intense. There are multiple public sector banks, private banks & cooperative credit societies; besides, there are thousands of NBFC’s. Thus the option to take loans is vast for the borrower. The public sector banks & the private banks are more rigid in case of the eligibility for the approval of loans. While the cooperative credit societies and the NBFC’s are more lenient in the approval of the loans.
The home loans are rejected by one bank does not mean that the borrower cannot secure the loans from other banks. The different lending financial institutions have different criteria for the approval of the loans. The other banks or NBFC’s may charge higher interest rates for the approval of the loans. Some banks charge higher interest rates but are liberal in case of approval of loans. Some banks may charge home loans interest rates as high as 18% per annum. The banks expect a minimum score of 700 points of CIBIL in case of the approval of the loans. As per the RBI mandate, the borrower must file the income tax returns; otherwise, the loans cannot be opted for by the borrowers. The home loans can also be availed in case of lower credit demand as the lower credit means lower risk to the banks. While as in the case of high demand for loans, the bank may not consider the approval as the risk liability increases. Maintaining a good credit score is a necessity for the loans to get approved. There are multiple tactics through which the credit score can be improved.
Things to do if home loans are rejected:
Check your CIBIL score:
The borrower should check their credit score if the loan gets rejected. There are multiple portals through which the credit score can be checked. The banks may reject the loan proposal in case of the CIBIL score is lower than 700 points. Thus, the credit score can improve, and the loan application can be re-applied to the bank to get approval.
Apply with lower credit:
If the loan amount is too high to be demanded, then the banks may not wish to take a higher risk in case of loan approval. Thus it is necessary that the loan amount should be optimum, and the remaining amount for the home loan should be paid as a down payment. The loans can be approved in case of lower demand for the loans.
Ask the bank for a reason for rejection:
The applicant should not forget to ask the bank reason for the rejection of the loans. After knowing the reason for rejection, the applicant should try to improve the mistakes like improper documentation, poor credit score, or else any other reason based on which the loan application is rejected before re-applying for the loans.
Apply with the bank or an NBFC which charge higher interest rates & liberal terms:
Some banks have liberal policies for the approval of loans. Mostly the banks which charge higher interest rates are the ones that may be more liberal in case of approval of loans. Thus such banks should be identified, and accordingly, the loan application should be forwarded to such banks for approval which may mostly approve the loan of the applicant.
Thus, if the loan is rejected, the applicant may re-apply for the loan with another borrower. Also, after knowing the reason for the rejection of loans, the applicant should try to improve the mistakes made while applying for loans for the first time and should apply again with confidence with another lender. The banks which have liberal criteria in approval of loans can be surveyed on the internet. Accordingly, the loan application should be forwarded to that lender for the approval of loans.