One may have done everything right and submitted all the documents required for home loan and followed the correct process of loan application, but still the home loan might not get approved. There might be many reasons for this. A few of these are:
- Low Credit Score: In most cases a low credit score is the reason for rejection of home loan. A mismatch in income or even one missed credit card payment can cause the loan application rejection.
- Low Repayment capacity: A representative of the bank does a mandatory check on the background of the borrower to ascertain his financial position and capability to repay the loan. If the representative believes that you will not be able to repay the loan, your loan application is likely to be rejected.
- Improper documentation: It is necessary that you submit the valid documents required for home loan along with the loan application. Due to the enormity of the amount home loan, the evidence and paperwork assume great importance. If false information is submitted or the paperwork is not complete, the loan will not be sanctioned.
- Other debts: If the person applying for home loan already has taken loan for other purposes, the bank has the right to reject the loan application.
- Property Issues: The property that the prospective borrower has chosen may not be according to the guidelines prescribed by the relevant authorities. The nature of the property can also be the cause of loan application rejection. It might be too old and the lender might have hesitation is lending for it.
- Age Factor: If the applicant is nearing retirement age, then bank might consider that you will have insufficient time to repay the loan and might reject your loan plea.