Reasons for Home Loan Rejection

A Home loan is a long-term commitment entailing a substantial sum of money. Indeed, lenders have to be cautious while approving home loan applications. If your home loan application was rejected, it could be due to the following reasons

1. You have unpaid dues

When you apply for a home loan, the bank will first procure your credit history record from credit rating agencies like CIBIL. A credit history check will reveal whether you pay your dues on time or not. This involves checking your credit card bills and existing loan payment timelines. In case, you have any unpaid credit card payments or EMIs, your home loan application may get rejected.

2. You have a low credit score

A low credit score is one of the most common reasons for home loan rejection. A missed credit card payment or a payment mismatch can affect your credit score drastically and result in rejection. Even if you have a high income, your creditworthiness can be questioned, as CIBIL does not consider your income while determining your credit score.

3. Improper documentation

Sometimes even silly mistakes like misspelling your name/contact information or omission of a field in the form can be a reason for mortgage refusal. Other reasons could include failing to submit the required documents, mismatch in signatures and false information.

4. You have existing loans

If you apply for a home loan while you are already debt-ridden with existing loans, the bank holds the right to reject your home loan application. Having more liabilities than your income is a red signal for the lending bank. If the bank thinks that you will not have enough income left after honouring other debt commitments, your application will be rejected.

5. Your application is not in line with the bank’s policy

At times, the bank’s internal policy may disagree with aspects like safety of the area of construction, type of property, buildings older than 20 years etc. and the loan may not be sanctioned.

6. You don’t meet the age criteria

Most banks require home loan applicants to be below 60 years of age. Additionally, banks also want the borrowers to complete the entire home loan repayment before the age of 70. Hence, if you are nearing retirement age or lack insufficient post retirement income, there are high chances of your home loan application getting rejected. If you are nearing retirement and still want to apply for a home loan successfully, consider asking your spouse or children to become a co-applicant to increase your chances of approval. Alternatively, you can also opt for a higher EMI or a lower Loan To Value (LTV) ratio to improve your home loan eligibility.

7. Your loan amount is beyond your repayment capacity

Whenever you submit a loan application, a bank representative will do a background check to ensure that you are capable enough to repay the loan on time. However, if the bank officials find that your current loan is beyond your repayment capacity, your application will be rejected.

Getting approval for a home loan requires a good credit history. If you want to get your home loan application approved successfully, ensure that you take all possible measures to improve your creditworthiness before applying. You can also use the Citibank home loan eligibility calculator to estimate if you are eligible for a home loan & to instantly know the quantum of the loan that you are eligible for!

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Whether you're a first-time buyer or looking to transfer your existing loan or leveraging your property's equity to expand your business, Citibank has different kinds of home loans that come with a host of benefits and competitive interest rates.

• Citi Home Loans - Easy Home Loans up to Rs 10 Crore at attractive interest rates with repayment tenure up to 25 years.
• Citi Loan against Property - Allows you to leverage your residential property's value by availing a loan against property.
• Citi Home Loan Takeover Plus Enhancement - Enjoy lower interest rates with our home loan balance transfer facility and then top up your loan to supplement further financial requirements.
• Top-up Existing Home Loan - Avail of the home loan top-up facility and get more money on the basis of your repayment record and the current property value.

View all home loan options and apply for home loan with Citi to start with your home loan journey today!