Reasons for Rejection of Loan application

Reasons for Rejection of Loan application.
Being aware of some of the major reasons of loan rejections can help and be better prepared and save from disappointments.
To ensure that the specific norms with respect to a minimum area of the flat are met with. The ‘minimum area’ norm will vary across Housing Finance Companies so one need to ensure that home meets the minimum area requirement while applying for the loan or else look for an Housing Finance Company that gives a loan as per flat area.
Financial standing of the applicant is checked before loan approval. Affirmative responses to whether his monthly income meets the minimum income requirement, whether he has a fixed source of income, and if he has a clean credit background will ensure getting a loan approved. The personal history of an individual like the number of dependents an individual is scrutinized to ascertain the repayment capability of the individual. A higher number of dependents implies lower repayment capacity. The last 6 months’ savings account statement of the individual will speak about his saving habits and his ability to honor Equated Monthly Installments.
The applicants age when applying for the loan will determine the tenure of the loan and in turn the Equated Monthly Installments.. So the higher the age the lesser the loan tenure and also the chances of getting the loan approved.
Housing Finance Companies are also likely to decline the loan in case of a legal/technical discrepancy like an unclear title deed.
Home loans on resale properties are sanctioned only if they are less than 30 years old. Similarly, the property also has to fall within the geographical limits as defined by the Housing Finance Company for it to sanction the home loan.
Keeping in view, factors effecting the individual home loan borrower, the question now arises how to select a housing finance companies operating in this field in the market. The first and foremost criteria may be the convenience, good and prompt service, acquaintance or dealings with the company or a group company in one way or the other and hassle free processing of papers. The second most important criteria could be a comparative study of the various terms and conditions, being offered by these housing finance companies, such as under:-
Q. Whether the quantum of loan is 80% or 90% of the cost of the property and whether expenses towards transfer, stamp duty, registrations etc are included in the value of the property for this purpose?
Q. Whether the rate of interest is fixed one or the option for adjustable rate of interest, linked to the primary lending rate, is permissible?
Q. Whether the monthly Equated Monthly Installments is calculated on monthly rest or yearly basis?
Q. Whether the rate of interest increases with the term of the loan, say above 15 years or so?
Q. Whether in addition to the security of the property in question, one or two guarantors are required?
Q. Whether any other collateral security is insisted upon?
Q. Whether any pre-payment charges are levied, if the outstanding loan is paid at a particular stage before the expiry of the repayment term?
Q. Whether any commitment charges are levied, if the full sanctioned loan is not availed of?
Q. Whether a memorandum or a letter about deposit of title deeds is taken, because it attracts a substantial amount towards the stamp duty in the state of Maharashtra?
Q. Whether certain concessions such as free group insurance against accidental death of the borrower and/or fire insurance against the destruction of the property are offered?





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3 thoughts on “Reasons for Rejection of Loan application

  1. properties are sanctioned only if they are less than 30 years old : Is this applicaple for properties in Mumbai too. If the property age is > 30 years, will there be any difficulty in getting home loan.

  2. My loan was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review

  3. My application was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review.

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