The real estate market has experienced robust growth in the last 3 years, mainly in the residential sector. It is primarily due to several investments and infrastructural developments made by both the public and the government of India. Central government CLSS or Credit Linked Subsidy Scheme under PMAY has also played a key role in increasing demand for residential properties.
These programs have made it possible for the common man to avail a home loan to purchase a house or apartment of their own.
All borrowers have to do is fulfil the home loan eligibility criteria. Nevertheless, there are chances that lenders may reject your home loan application. It can be due to several factors such as failing to meet the terms, not furnishing proper documents etc.
Consequently, go through the points mentioned below if you wish to avoid rejection –
- Unsuitable property –
You should apply for home loans for properties which are authorised by a financial institution and fall within its serviceable area.
- Applicant’s age –
In some instances, your age can also be the reason behind your home loan application being rejected. It is because home loans usually have an extended repayment period. However, if you are nearing 60, EMI payments can be difficult for you post-retirement.
- High FOIR –
A high FOIR or fixed obligation to income ratio suggests to lenders that you have too many obligations to attend and may not have enough finances to make the EMI payments. Hence, one should keep their FOIR within 40-50%.
- Poor CIBIL score –
Low CIBIL score can also lead to your home loan application being rejected. Even though the CIBIL score is not mandatory for a secured loan, still a poor score can hurt your lender. Factors such as late payments, defaults, too many loan applications can result in low CIBIL score. A low credit score is one of the factors that can affect your home loan eligibility.
One can also opt for a home loan from financial institutions or HFCs, which have easy to meet home loan eligibility criteria and minimal documentation requirement.
- Not fulfilling the home loan eligibility criteria
The eligibility criteria for a housing loan can vary depending on the lending institution. However, the essential criteria that one should meet to apply for a home loan is as follows –
- Applicants should be a resident Indian citizen.
- Age of salaried applicants should be within 23 – 62 years of age and self-employed applicants should be 25 – 70 years of age to apply.
- Salaried applicants should have a work experience of three years, and the minimum salary required to apply for a home loan is Rs. 25,000.
- Self-employed individuals applying for a loan should have a business running for five years.
- Not providing the required documents
Once you meet the home loan eligibility criteria to apply for a home loan, you should know about the documents required during the loan application procedure.
The home loan documents, aside from KYC documents such as Aadhaar, PAN, Voter ID, driving license, passport, are –
Self-employed individual
- Documents for proof of business.
- Balance sheet and profit and loss account statement (audited by CA).
- Bank account statement for the last six months.
Salaried individual
- Salaried individuals need to furnish salary slips.
- Form 16.
- Bank account statement for the last 3 months.
Besides the ones mentioned above, there can be other home loan rejection reasons. However, implementing the above measures and knowing the home loan eligibility criteria before applying will improve the chances of your application being approved quickly.
