5 Reasons Your Loan Against Property Application May Rejected

Loan Against Property

So, you may have found the right kind of offer for a loan against your property and may be busy preparing documentation for applying. You need to put all your papers in place and see which bank gives you a good offer in terms of easy disbursement and competitive interest rates. Once the bank is finalized and the forms are duly filled and submitted, all you can do is to wait for the approval.

Unfortunately, if your loan against property application gets rejected, it can prevent you from using the prospective loan amount for your purpose. It can also stall your credit file and ruin your chances of getting future loan applications approved.

So, before you apply for a home loan let us look at the top 5 reasons your loan against property application may get rejected:

Reasons for which Your Loan Gets Rejected:

  • Missing Documents

Your loan against property is sanctioned predominantly based on the documents you provide. If the mandatory documents are missing, the lender will reject your application for sure.

  • Unsatisfactory Employment History

If you are a new business owner or have changed several jobs in recent years, then it will be difficult for you to procure a home loan. If you plan to buy a property, it is recommended to stay employed with the same company for at least two years before you decide to buy a house. 

It is essential to show you can pay a mortgage with a steady income. Loan against property EMI calculator must show that you are in an excellent position to pay back the bank’s mortgage.

  • Skipped Bill Payments

This is unexpected but true. Your unpaid bills (especially phone bills) can lead to home loan application rejection. Many of us may think it is a small thing, but the fact is that it can create an obstacle in your dream home purchase. Unpaid bills affect the credit rating, compelling the lender to reject a home loan application.

  • Wrong Property Valuation

It is essential to do proper research before finalizing a property. If you decide to buy a property with a valuation higher than the circle rate or guidance value, then the chances of your loan getting rejected are high. 

For example, the property you decide to buy has a circle rate of 45 lacs, but you are paying 80 lacs for the property because the seller has quoted so. 

The bank will reject the loan because if you default the loan, they will not be able to recover the money through the auction. That’s because the circle rate of the property is lower than the loan, they have given you.

A minor deviation of between 15-20 percent is acceptable, but anything above it will lead to outright rejection.

  • Property Not in Your Name

You cannot be applying for a loan if your name is not included in the property papers. Your name must be among the owners of the house. You cannot be applying for a loan on behalf of your parents or siblings.

You can discuss and have co-applicants and maybe share the EMI using lap EMI calculator for seamless loan repayment. There are many other reasons for rejection of your loan against property applications like your age – higher the age, the higher the chances of rejection. Or, if you have not obtained a NOC from previous lenders and the loan seems to be open to the current lender, they will reject your application without second thoughts.

It is now clear that there is no guarantee of a home loan approval even if you are earning well or maintaining a good credit score. Therefore, before you apply for a loan, be sure that you have checked all the boxes to reduce the chances of rejection.

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