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Reasons Why Your Mortgage Applications Get Rejected
Posted on Thursday, September 22nd, 2022 | By IndusInd Bank
Owning a house is a milestone that most aspire to achieve, and the easiest way to get one to your name is to take a home loan. Even though home loans are more accessible than ever, banks still consider many factors before approving a home loan application. If a lender has rejected your home loan, here are some reasons for your mortgage application rejection.
1. Ineligible For Home Loan
If a lender rejected your home loan application, you simply might not have met their eligibility criteria. At IndusInd Bank, you need to fulfil the following eligibility criteria to secure a home loan with us-
- You must be at least 24 years of age
- The applicant must be 60 years of age at the loan’s maturity
- Documentation (address, identity, and income proof)
- Minimum net monthly income (varies for salaried employees, professionals, and self-employed individuals)
- Minimum one year of stay at current residence
- You must have worked for one year at the current organisation
2. Late Payments and Defaults
Your loan and credit card payments make up a chunk of your credit report. As a result, having late payments on your credit report can hurt the chances of banks approving your home loan application.
Similarly, outstanding loans also affect your chances of loan approval as they put an additional burden on your finances. The lender might question your ability to repay the loan. Hence, rejecting your loan applications.
3. Unfavourable Property
Are you sure about the house you have chosen? An applicant’s credit history is not always the reason for rejecting a loan application. Often the property can lead to loan rejection. Banks verify properties with local authorities before approving amortgage application. They do so to identify if a property is disputed or does not follow local building guidelines. If it doesn’t, they reject the application.
Similarly, your bank may not approve of the builder due to their track record. So, before committing to a house, run a thorough background check on the builder and the property.
4. Too Many Loan Applications
Every time you apply for credit, lenders check your credit report. These checks are called hard enquiries and are recorded on your credit report. So, how can it affect your mortgage application? If your credit report has many hard inquiries in a short period, it means you have been applying for loans frequently. Lenders consider it a sign of financial instability and reject the home loanapplication.
These hard inquiries stay on your credit report for 12 months. So, you must wait at least a year before applying for a new home loan.
5. Admin Errors
If your loan application was rejected, there is no need to panic. Chances are there might be an error on your credit report. Lenders use computer applications to check eligibility, and there are chances of typos, incorrect details, and subtle differences in documents. Hence, the computer may show your application as ineligible, and the lender may reject your home loan application.
In such situations, ask the lender to provide details on the grounds they rejected your application. So, you can cross-check the details and rectify the errors.
Back To You
These were some reasons why lenders reject your home mortgage application. So, before applying for a home loan, make sure you have no outstanding payments or loans; also, look for any issues in your credit report.
If you are looking for quick home loans, turn to IndusInd Bank. We offer instant home loans with minimal documentation. Our online home loan applicationand simple eligibility criteria make loan approval easier and faster. With no hidden fees and flexible tenure, we ensure that a home loan is not a burden on your shoulders.
Visit our website and apply for a home loan today.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
