Outlook Money
There may be many possible reasons for a home loan rejection, some common and others unexpected. Here, we explore six surprising factors that could lead to denial.
A home loan may be denied if the builder is not approved by the bank. Not all builders qualify for loans from every financial institution, so checking the approved builder list is crucial.
Even if a builder is approved, specific projects or phases may not be. Banks can refuse loans for certain sections, so verify project-wise approvals before applying.
Banks approve loans based on their own property valuation. If this differs from the price agreed between buyer and seller, the loan may be rejected, even if the deal seems fair.
Many applicants overlook their credit score or are unaware of it. Low or unknown credit scores are a common reason for loan rejection. Always check your credit report before applying.
Addresses linked to defaulters may be blacklisted, affecting new applicants. Living in a property associated with a previous tenant who defaulted can lead to loan rejection.
Lenders prioritise job stability. Frequent job changes or temporary positions can reduce approval chances, and some banks require 3+ years with the same employer for approval.
Even with a high salary or good credit score, unexpected factors can cause loan rejection. Checking builder approvals, property valuation, credit history, tenant records, and job stability improves your chances.