If your home loan application rejected by a lender, this does not mean that you will not get a home loan for life. Do not feel discouraged. All that you need is to make the right moves.
Do not shy away from asking the lender
This is the best way to begin working toward what went wrong. Asking the lender about why your home loan got rejected or if you did not meet their home loan eligibility criteria, can help solve the problem. As the lender would have analysed your home loan application in detail, he can tell you why exactly it was rejected. This will help you reapply for a home loan.
Go deep into details of the problem
The letter of rejection issued by the lender is a generic one and does not state the reason for rejection. Once the lender tells you the reason for rejection, you must dig deep into the details and do everything you can to rectify the problem. You should not lose hope. Focus on the problem.
You can also decide to lower your home loan amount
If the reason for rejection is that your monthly income is not sufficient to handle the home loan burden, you can lower your home loan amount. This will help the lender meet the bank’s prescribed norms of the ratios within limits. For instance, the debt servicing ratio can be easily corrected, and this will make the lender confident of your repaying capacity.
Have you thought of repaying your existing loans?
Your running loans (both secured and unsecured) come in the way of home loan approval. The equated monthly installments (EMIs) you pay on your existing loans increases the Fixed-Obligation-to-Income ratio (FOIR). This means that your fixed monthly obligations and repayments commitments are high relative to your monthly income. So, you must consider closing one or two of your existing loans, especially the ones nearing closing dates.
Check credit report, evaluate and improve it
If your Credit Information Bureau (India) Limited-CIBIL score/report is the reason why your application was rejected, get your CIBIL report from the lender (it is chargeable). Study the problem area and correct it. You can always log into the CIBIL’s website online to update any information. If wrong information is reflected in your credit report, in your name, you can report this on CIBIL’s website. The information takes 40-60 days to get updated. Keep supporting documents ready in case of discrepancies in your credit report.
Market value of the property might be another reason
Your home loan amount is decided based on the market value of the property, as reflected in the Loan-to-Value ratio (LTV). Different lenders have different LTV norms. But most of them fund up to 80 per cent of the market value of the property. However, if you are sure that the lender (i.e. the bank’s outsourced technical agency) has undervalued your property, get the valuation done yourself and submit the technical report while reapplying for the home loan. Think of providing additional security too.
Is there any important paper missing?
Take legal advice if any important property paper is missing. There is always a solution for a missing document. No lender wants to lose a customer. So, banks and financial institutions are always ready to help so long as you are willing to honour your contracts.