When you find the home of your dreams, the next step is to apply for a home loan and get the funding. However, it would be devastating when you have to let it go because the lender rejected your home loan application. Buying a house involves lots of emotions, but a few missteps can lead to a loan rejection. If the lender rejects your home loan application, it does not mean that you can’t take a home loan in your life. With the right steps, you can make it happen.
Below, we will tell you what you should do if a lender has rejected your loan application.
Ask the Lender Why
The first step is to find out why the lender rejected your loan application. If the reason is not apparent, ask the lender why. Did you not fulfil their eligibility criteria? Was your credit score low? Were there any errors in your loan application? Identifying the reason can help resolve the issue. Since the lender must have analysed your application in detail, they can tell you the exact reason why they rejected it. Once you know the reason, try to resolve the issue and reapply.
Lower Your Loan Amount
If the lender rejected your home loan application because your income is not enough to handle the EMIs, you might consider reducing the home loan amount you applied for. The loan amount that lenders approve largely depends on your credit score, income, repayment capacity, and DTI ratio.
Reducing the loan amount increases your chances of getting home loan approval this time. However, since you are applying for a lower loan amount, decide if you can pay the remaining amount from your savings. With a reduced home loan amount, you will need to make a higher down payment or look for a cheaper property that you can afford.
Reduce Your Debt-to-Income Ratio
Have you ever thought about paying off your existing loans before applying for a home loan? Since a home loan is a long-term commitment and involves a hefty sum, lenders want to ensure that you are not indebted already. If you are, it may become difficult for you to be consistent with your EMIs. So, if you already have too many loans, the lender might have decided to reject your loan application due to that.
Your existing loans, whether secured or unsecured, often come in the way of your loan approval. Your interest rate also increases if your debt-to-income ratio is high. That means that your current financial obligations are largely related to your regular income. So, consider paying off most of your existing loans before applying for another home loan again.
Check Your Credit Report
If a low credit score was the reason for your loan rejection, request your credit report from a credit bureau and review it properly. Identify where the problem is and try to resolve it. Remember, credit bureaus provide you one copy of your credit report every year. If you request an extra copy, it will be chargeable. However, the cost would be worth it if you can improve your eligibility with it.
Evaluate your credit report carefully and ensure that there are no errors or discrepancies in it. If you identify anything doubtful in your credit report, check it thoroughly and raise a dispute with the credit bureau. The information may get updated in 40-60 days, after which you can reapply for a home loan. When it comes to home loan requirements, most lenders ask for a credit score of 725 or above. If removing errors from your credit report has improved your credit score, you can reapply for a home loan and get approval this time.
Get Property Valuation Done
Lenders approve your home loan amount depending on your property’s market value, as mentioned in the Loan-to-Value (LTV) ratio. Different lenders might have different LTV regulations. Most lenders lend around 80% of the property’s market value, and you have to pay the remaining amount as a down payment.
If you think your lender’s agency has undervalued the property you want to buy, you can hire your own agent for property valuation. Following that, you can submit your technical report to the lender and reapply for a home loan. Providing extra security can also attract approval this time.
Arrange the Missing Papers
If the lender rejected your home loan application because of insufficient documents, then you may try to arrange the missing papers. To apply for a home loan from Clix Capital, you need to provide the following documents:
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- Completely filled online application form
- Passport-sized photograph
- Identity Proof- Aadhaar Card, Pan Card, or Government ID for government employees
- Address Proof- Aadhaar Card, passport, voter ID, driving license, or utility bills for the last 2 months
-For salaried individuals
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- Last 3 months’ salary slip
- Last 6 months’ bank statements showing salary credit
- The latest copy of Form 16
If you don’t have any of these essential papers, arrange them and ensure to meet your lender’s home loan requirements. Lenders do not want to lose their customers, and most of them will be ready to help you in the process. Once you get your needed papers, reapply for a home loan with improved chances of approval.
So, if you are looking for a home loan, Clix Capital can be your best financial support. We offer home loans of up to ₹ 2 Crore with a repayment term of up to 25 years. Check out our easy eligibility and minimal documentation requirements and apply now to get your home loan approval fast. If you get a loan rejected the first time, improve your eligibility using the tips mentioned above and apply again. Our customer representatives will help you in every possible way to simplify your loan process to get your dream home easily.
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You can also reach out to us at hello@clix.capital or call us at 1800 200 9898
