Applied for A Bank Loan But It Got Rejected? Here’s Why
Mar 28, 2017 Home Loan
Buying a property is a dream and due to the ever rising price of properties, individuals seek help from banks for the loan to buy the desired property. Sometimes, the banks or housing finance companies may reject the loan application of the buyer.
There may be a number of reasons for the same.
1.Credit history:
The major reason behind the rejection of home loans is bad credit history. Since the origin of credit information bureaus like CIBIL, it has become easier for the lender companies to track the credit history of the applicant. There’s isn’t much awareness among the people that a good credit history is important.
Credit history may be affected due to delay in payment of earlier EMIs of credit card dues. Credit history is also affected if the settlement has been made with the bank and account has been closed, in which case lender had to waive off part of the due amount. Delays in payments of EMIs affect the credit score while isolated instances do not. If the loan application is rejected due to low or bad credit history, the chances of the loan being approved are very less, unless the lender knows the reason behind low credit history.
2.Age of applicant and the property:
Banks and home loan companies ensure that their loan is repaid back. For this, the age of the applicant and the property plays a major factor too. If the applicant has few years remaining for the retirement, then the banks may reject the loan or approve the loan with a short tenure and low amount. It is a general impression that the banks don’t give out loans for properties which are old. This isn’t true. If the property valuer appointed by the bank, evaluates that the life of the property is very less and the condition is poor than the bank may reject the loan application.
3.Flow of income and tax returns:
If the applicant is in the business where the flow of income is unpredictable like tuitions, cooking etc, then the application is rejected as the lender may not consider lending you loan favourable. However, if the savings through the business is concrete due to investments in mutual funds, fixed deposits etc, then the lender may consider approving the loan.
If the applicant has filed the income tax returns for more than a year together or in short time, than the bank assumes it is only for the purpose of availing the loan and can reject the loan.
4.Existing loans:
If the applicant already has an existing huge loan from another bank the lender may reject the application. The lender will know about them through the CIBIL report or the bank statements that the applicant is supposed to submit along with the application.
There may be a number of reasons for the same.
1.Credit history:
The major reason behind the rejection of home loans is bad credit history. Since the origin of credit information bureaus like CIBIL, it has become easier for the lender companies to track the credit history of the applicant. There’s isn’t much awareness among the people that a good credit history is important.
Credit history may be affected due to delay in payment of earlier EMIs of credit card dues. Credit history is also affected if the settlement has been made with the bank and account has been closed, in which case lender had to waive off part of the due amount. Delays in payments of EMIs affect the credit score while isolated instances do not. If the loan application is rejected due to low or bad credit history, the chances of the loan being approved are very less, unless the lender knows the reason behind low credit history.
2.Age of applicant and the property:
Banks and home loan companies ensure that their loan is repaid back. For this, the age of the applicant and the property plays a major factor too. If the applicant has few years remaining for the retirement, then the banks may reject the loan or approve the loan with a short tenure and low amount. It is a general impression that the banks don’t give out loans for properties which are old. This isn’t true. If the property valuer appointed by the bank, evaluates that the life of the property is very less and the condition is poor than the bank may reject the loan application.
3.Flow of income and tax returns:
If the applicant is in the business where the flow of income is unpredictable like tuitions, cooking etc, then the application is rejected as the lender may not consider lending you loan favourable. However, if the savings through the business is concrete due to investments in mutual funds, fixed deposits etc, then the lender may consider approving the loan.
If the applicant has filed the income tax returns for more than a year together or in short time, than the bank assumes it is only for the purpose of availing the loan and can reject the loan.
4.Existing loans:
If the applicant already has an existing huge loan from another bank the lender may reject the application. The lender will know about them through the CIBIL report or the bank statements that the applicant is supposed to submit along with the application.
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