Arent home loans are probably the biggest financial commitment that one makes in their entire lifetime? Certainly yes. With huge amounts and longer tenures of up to 20-30 years, it’s a big financial commitment to take a home loan. Even other processes like finding the right property within budget, the right lender and accumulating downpayment are equally important. And finally, when you submit a Bank of Maharashtra home loan application, getting it rejected can be disheartening. Hence, to avoid it, it’s better to know the reasons behind it so that you not only get approval but are also able to fetch lower Home Loan Interest Rates as well.
Explained here are some loopholes in your home loan application that can lead to its rejection.
Lack of correct and adequate documentation
Documentation is a key part that can never be tweaked or compromised upon by lenders for any loan. And those who fail to put forth the right set of documentation are usually denied a Bank of Maharashtra Home Loan. As complete and proper documentation is crucial for a loan application’s both speedy processing as well as approval, it is important for everyone to be ready with adequate documentation for getting the application approved. Failing to do this can result in the application’s rejection despite qualifying for all other criteria like income, credit score etc.
Failure to have minimum income as per lender criterion for a home loan
More often than not, all home loan lenders put forth minimum income criteria for loan home applicants when evaluating their loan applications, especially because these are big-ticket loans. In fact, income is often the first filter that lenders require whenever an applicant applies for a Bank of Maharashtra home loan. But remember that such income criteria can even not just vary from lender to lender, but also as per the applicant’s location, i.e.rural, urban, semi-rural/urban etc. This is due to the different payscale and living expenses of each location, which impacts loan repayment capacity. So, those who do not meet these minimum income criteria are usually denied the home loan, or sometimes they might get a lower amount approved as per income and capacity, along with relatively higher home loan interest rates if they fit in all other eligibility criteria.
Weak credit profile
Credit score has, in the past decade or so, not just become one of the most crucial parameters for evaluating home loan applicants’ creditworthiness, but it also forms the basis for determining home loan interest rates as well. Having a high credit score helps in not one but multiple ways. It indicates a disciplined credit repayment behaviour and history, which boosts Bank of Maharashtra home loan approval chances and even enables the borrower to avail of lower and attractive home loan interest rates.
On the other side, having a poor credit score indicates indiscipline in repayment history, which can make you a risky applicant in the eyes of a home loan lender, and hence they may hesitate in lending to you, which can lead to rejection of your home loan application. Thus, ensure to have a solid credit score in order to increase home loan approval chances and also fetch lower interest rates as well, which can help lower the overall interest cost of the big-ticket home loan.
Weak property characteristics
Since Bank of Maharashtra home loan, like all home loans’ nature, is secured against the property for which you are availing it, lenders practice due diligence while critically evaluating the pledged property. So, before approving your home loan application and accordingly sanctioning your loan based upon the LTV ratio and property’s value, lenders factor in parameters such as location and age of the property, infrastructure of surroundings etc. Unsatisfactory or weak property characteristics can lead to the rejection of home loan applications.
Risky or unstable employment profile and history
Lenders tread cautiously when checking your employment history and profile. Generally, those working in the government sector and those working with reputed corporates/private sector MNCs are deemed relatively safer or less risky than those working in profiles like mining, civil sector, shipping etc., as the risk of life is higher in the case of latter.
Moreover, as a lot of people, especially youngsters, tend to go for job-hopping nowadays, whether for getting a better job or increasing income, lenders view such habits as risky in terms of stability of income. So, when you go for a Bank of Maharashtra home loan, make sure to avoid frequent job-hopping, especially before taking a home loan.
Age outside bracket set by the lender
Amidst the criterion for your Bank of Maharashtra home loan eligibility, your current age, along with the expected age at the end of tenure, are factored in by the lender. Generally, lenders prefer completion of home loan repayment tenure before you retire since the regular inflow of income would cease post-retirement, hence making it difficult to continue home loan EMIs at the existing home loan interest rates. Even if you would have a pension, it would certainly be a much lower amount. Also, some lenders may outrightly reject your home loan application if you, at the beginning of the application itself, fall outside the minimum and maximum age bracket set by the lender.
High level of EMI to Income ratio
When in the process of evaluating your home loan eligibility, lenders assess your repayment capacity by factoring in your EMI to income ratio, which is the proportion of your existing income currently being consumed for repayment of loan EMIs. If this ratio breaches the 40%-50% mark, lenders may tread cautiously and hesitate in lending to you. This is because having a higher EMI to income ratio indicates that a high proportion of your existing income is used for loan EMIs, hence leaving you financially vulnerable if an exigency arrives or expenses arise.
So, in order to avoid getting your Bank of Maharashtra home loan application rejected, make sure your EMI to income ratio does not go beyond this 40%-50% mark (after taking into consideration the proposed home loan’s EMI). Besides the possibility of rejection, you may even have to pay higher home loan interest rates to cover up for the higher risk involved when your EMI to income ratio is on the higher side, as lenders would be taking higher credit risk in agreeing to lend the home loan to you.