30 JUNE, 2021

If you are looking forward to financing your dream home, you’d want to make sure that the lenders do not reject your home loan. However, your unawareness about certain things and any mistakes you make while applying, could lead to home loan rejection.

Hence, it is essential to know the reasons why your loan could be rejected. Keep on reading to know more.

  • Furnishing incomplete documents
    Lenders gather all details about you from the documents you submit. Therefore, they can reject an application if they find incorrect or incomplete information in your documents, like a mismatched signature or errors in name and address.

    Your signature should be the same in your loan application and the supporting documents. Different signatures are a clear sign of fraud, which can make the lender reject your application. In addition, you should avoid misspelling your personal details or making other clerical mistakes while filling the application form.
  • Poor credit score
    According to a survey conducted by Credit Sudhaar, a credit health improvement company, 92% of respondents were not aware of their credit score. If you are one of them, you could be surprised if the lender rejects your application for a poor credit score. 

    For a home loan in India, you must have a credit score above 700. Anything below 700 keeps you at a higher risk of home loan rejections. You should regularly check your credit score and rectify mistakes in your credit report to ensure you have a clear credit history.  
  • Failure to meet eligibility
    Your application would not be approved if you do not fulfil the home loan eligibility criteria of the lender. Moreover, if you have had an unstable employment history, it could lead to loan rejection. Lenders prefer the applicant to be employed in the same organisation for at least three years. Similarly, they might reject the application of those with contractual jobs, seasonal occupation, multiple job switches and low work experience.
  • Past defaults
    Even if you have a stable high paying job and a good credit score, lenders could still reject your loan application if you have committed defaults in payments earlier. It is possible that you could have outstanding payments on credit cards or some old charges that you must have missed.
  • Unapproved builder
    Lenders can reject your home loan if the property in question is illegal or the builder is not approved. Also, if the builder is on the blacklist of the lender, your home loan could be rejected. You should check the legitimacy of the builder and property before applying.
  • Property valuation
    Lenders consider the age and valuation of the property while processing your application. You might be eligible for a higher loan amount based on your credit score or income. However, if the lender finds that the property has a lower valuation, they can reduce the loan amount or reject your loan application.

    Lenders are not obliged to give you the reason when they choose to reject your home loan application. Therefore, you should ensure that your application is free from errors and all the requirements are met. Being aware of these reasons would help you understand the lender’s perspective and avoid home loan rejections.



Latest Comments

Leave a Comment

200 Characters

Read Next


What Is Immovable Property? Know About It Types And Legal Rights


Builder Buyer Agreement BBA: Meaning, Importance, Before & After Rera Act


Power Of Attorney: Meaning, Eligibility For Home Loan

Load More

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.