You are awarded a home loan when your own eligibility (mainly financial reasons) along with your property’s eligibility match the lender’s policy. Let’s talk about why lenders question your eligibility for a home loan and may deny your application.
1. The Processing Fee Check Bounces – Whatever the reason, bankers are very sensitive about the processing fee check and it is considered very sacrosanct. Make sure your account has enough funds for it to settle.
2. Financial Eligibility: As a general rule, it can be assumed that a salaried person can have 50% of their net salary and a self-employed person can have 75-80% of their monthly income, paid as EMI for any loan. If you are already paying substantial EMIs, more than your finances can afford, your application may be rejected.
3. Guarantor of someone else’s loan – Okay, so you became a guarantor of someone else’s loan. In the eyes of the lender, it is as good as taking out a loan. So be careful when doing this.
4. Age of the property – Yes, lenders believe in the age of the property. They will not finance a property that they believe will not hold up for 35 or 40 years. Strange!! This is how it happens.
5. Your contribution: The lender requires that a minimum of 25% of the total value of the property come from you. Any minor and he starts to get nervous.
6. Too Many Co-Owners – To counter the above point, you may want to add more co-owners to increase your eligibility, but the lender doesn’t like having too many co-owners either.
7. Property in joint ownership with not so close relative – EG. A property co-owned with a friend. The lender says, thank you sir, we won’t be able to finance it. Co-ownership with unmarried daughter, cousins, colleagues – the lender is likely to reject the application.
8. Career change: bankers are conservative and that’s good for the economy. They don’t like risk takers like a person who is changing jobs or someone who has left work to start out on their own; they prefer to wait on the sides for you to stabilize before they fund you.
9. Educational Qualification and Work Experience: They may not say this specifically, but at the bottom of some page of the policy there are restrictions based on your educational status. A college student is less likely to have a steady job, and that poses a potential risk to the lender. Similarly, if he is changing jobs too soon or is very new to the job, his chances of getting a home loan may decrease.
10. Your employer may not be worth it: You are working for a company that is not known in the market. The lender may ask you to obtain the financial data of that company.