In this age where on the one hand, banks are fighting the increasing number of NPAs, and more people are aspiring to purchase property, getting an SBI Home Loan or any other home loan for that matter is a challenging process. For a common person, a home loan is a major expense a common person makes in their life, and thus, it is not surprising that lenders are cautious when it comes to disbursing housing loans. As we all know, banks consider various factors in loan applicants and scrutinize their profiles to make sure the borrowers can pay timely and within the loan tenure.
When it comes to home loan applications, NBFCs and Banks consider stable employment as one of the top parameters to ascertain whether the borrower will be able to make timely repayments or not. Some banks even insist that the borrower presents a certificate stating s/he will be with the same company for a period of at least three or more years to be found eligible by the bank for a home loan. Hence, if you have low work experience, or working a contractual job, or have changed employers in the past frequently, stop before you apply for SBI Home Loan or any other loan for that matter, as you are at a higher risk of facing home loan rejection than those with long work experience.
Loan to income ratio
There is a rule of thumb you have to follow while applying for any loan, such as SBI MaxGain Home Loan: your total loan liability, including the one you are going to apply for a home loan, shouldn’t exceed 50% of your income. In case you do have other loans on your loan, then your new home loan application will certainly get rejected as the lender will consider you who is overburdened with loans.
Having a poor credit score
Do you know your credit history is one of the essential factors in determining your loan approval? For the uninitiated, a bad credit score indicates poor repayment habits and insufficiency of funds, shows the borrower to be negligent, and if the repayment is delayed repeatedly, the credit score deteriorates and stays that way unless some action is taken by the borrower. To be a potential borrower in front of the bank, you should have at least above 750 credit score to be eligible for SBI MaxGain Home Loan among prospective borrowers. In case your credit score is low, there are many ways to improve it, such as paying bills on time, checking your credit report timely, paying outstanding bills, etc.
If they found any irregularity in filing ITR
Even if you have regular income with an esteemed employer and a good credit score, banks and NBFCs may decline your home loan for SBI MaxGain Home Loan request if they find any irregularity in filing income tax returns. For example, if the borrower has filed ITRs for more than one year within a short period, the bank may perceive this act of yours to be desperate enough to seek home loan approval.
Job profile that involves working in risky conditions
Even if you have a stable job, but your job profile involves working in hazardous working conditions that are considered life-threatening, such as journalists, then chances are very that your application for SBI MaxGain Home Loan may get rejected.
The property for which you seek a loan is undervalued.
NBFCs and Banks do a prior valuation of the property for which they seek a loan. If they find out the value of the property is too low or unsatisfactory to offer a loan for, there is a high likelihood that you may face rejection. In such a scenario, find a house that should be valued close to the market price.
Disputed or legal issues in property documents
If the property you are considering buying has unsettled legal issues or disputed aspects associated with it, then it could be a cause of concern for banks to reject your loan application. Remember that a bank will go through all past records of the property you are considering buying to ensure that the property has marketable and clear titles.
Shady and unapproved builders
Even if you have a good credit score and a stable job with a job profile that a bank can work around, your home loan application still may get rejected if the bank is not happy with the builder. You must remember that a bank scrutinizes projects that a particular builder takes based on various parameters. Hence, if you are seeking SBI Home Loan for a property developed by a builder not approved by the bank, the chances of rejection are high.
Not fulfilling the Age and Eligibility Criteria.
Do you know banks may even deny you an SBI Home Loan if your age doesn’t fall within the eligible range? It is because home loans generally have a long tenure going up to 20 years and even 30 years. For example, if you are nearing the retirement age or you would retire during the loan tenure, the bank has the right to reject your loan application as you will be perceived as a dicey borrower. Hence, if your age is high, you might want to take a home loan in someone else name who might be the best age fit as per the bank. Having a younger co-applicant such as your spouse or children can increase your chances of your SBI MaxGain Home Loan application getting approved.
Residential address on the defaulter’s list
In case your address is found on the defaulter’s list with the national credit bureau, either due to a family member or tenant, you will be denied a loan. To ensure you do not face rejection on your SBI Home Loan application due to this reason, make sure you must report to the bank before applying for a loan.
The aforementioned points are not written with an intent to discourage you from applying for a home loan, and they are stated to prepare borrowers out there who don’t want to face rejection on their SBI Home Loan application. And remember, every time you face a home loan rejection, you will be tempted to apply for another loan, and that will reflect your credit-hungriness, which will further impact your credit score. Hence, to avoid entering a vicious cycle of loan rejection, the above-mentioned points are stated to keep you informed of the basic reasons behind why a loan application gets rejected.