Opting for home loan is an important factor for the buying decision of the purchaser. The home loan needs to be repaid on time by the client so as to retain the property. There are many types of properties a customer can buy on loan like housing apartment, bungalow, villa. The housing apartment is provided with maximum 80% credit and 20% down payment. While as if the borrower opts for loan against property he/she can opt for loans up to 60-70% of the property valuation. The property should be of a legal possession & with clear title so as to apply for loan.
Type of properties possibly liable for home loan rejection:
- Properties not having clear titles with legal paperwork can be rejected.
- Properties with illegal encroachment or with disputed property is also likely to be rejected in case of the property with un-clear titles.
- Properties opted for loan against the property can also be rejected in case of the property owned by illegal means, or with un-clear titles or a property which is jointly owned can be rejected.
- Properties with disputed ones can also be rejected. Or the one running over the court cases.
Reasons for an individual to get home loan rejected:
- If the applicant is having a very low salary and is trying to opt for very higher amount loan which does not fits into the criteria of the home loan eligibility.
- If the applicants CIBIL records are poor or average category then the loan may be rejected or might be the applicant may be charged higher interest rates or else loan may possibly be rejected. As the poor score depicts that the applicant must have defaulted the loan sometimes or the average score depicts the applicant must have delayed the payments sometimes in the previous credits being opted by the borrower.
- If the applicant is planning to buy a too costly property which is beyond the budget of his/her own income then possibly bank or a financial institution may reject the credit demanded by the applicant.
- If the applicant is not maintaining sufficient bank balance in the bank account and the mentality of the applicant seems to be ok a kind of thoughtless spending the buying behavior of an individual is analyzed then the applicant is not considered as a stable person who can repay the bank balance on time.
- If the applicant is found to have been convicted guilty for any criminal offences or has been running under the court cases for any misconduct based allegations then the loan credit facility can possibly be rejected.
- If the applicant does not files income tax returns at all or found to be hiding the income from the government then the applicants loan can be rejected. Because as per the RBI guidelines it is mandatory that the applicants who file ITR returns only those applicants should be given credit facility.
- If the applicant is un-employed or is found to have an un-stable job or is found with frequent change in jobs the applicant is found to be unstable and hence can lead to the rejection of application.
- If the applicant is working in a hazardous factory site or in jobs which are threat to life like for example coal mines, highway or mountainous infrastructure sites, hazardous factories where there can be possibly problems of accidents due to leakage or explosives. In case of life threatening jobs the applicants loan proposal may be sometimes be rejected as there can be a risk involved in extending the loans without the guarantor.
- Also in case of unstable job bank may ask for guarantor which if the applicant is unable to provide then can possibly lead to rejection of loans.
- If the applicant is having a business but is unable to provide registration proof or is unable to provide statement of profits gained from the business or turnover proof as well as profit and loss statement certified by the charted accountant.
- If the borrower is employed in an un-organized sector with no employment proof or no income statement then also possibly the loan can be rejected.
- If the borrower is having any illegal business dealing with prohibited items or is involved in illegal circulation of restricted items or is running an un-registered business then the loan can be rejected.
- If the applicant has recently started a new business and hence no guarantee of future stable income then the loan proposal can be rejected. As the successful running of business for minimum 2 years is mandatory before applying for loans.
- If the applicant has attained the age of 60 years or is very about to attain the retirement age then possibly the loan can be rejected as there is no guarantee of future income and hence the loan can be rejected.
- If the applicant is not a citizen of India or is not having a valid govt. id proofs issued by Uidai, Income tax department, election commission of India or any central/state government department. Then his/her loan can be rejected.
Conclusion:
Hence we can conclude that the borrower should have a sufficient income before opting for a loans. Also he/she should maintain sufficient bank balance in bank account before applying for loan. Also the applicant should maintain good cibil score as well well as should maintain all relevant documents like ITR returns proof, income proof, government id proof as well as proper income proof.
