Buying a home is a dream for many, but the biggest obstacle that could arise on your way to becoming a homeowner is obtaining a home loan. Since home loan rates are high, it is considered a big-ticket investment, with a repayment tenure that can extend up to 30 years. Lenders often ensure to do a thorough check before approving such home loan applications.
Many factors can affect the approval of your online home loan, including your income, credit score, existing loans, and so on. It can be discouraging if you have been rejected for a home loan, but you can always try again.
Here are some ways to get your home loan application approved even after getting rejected.
Reasons For Getting Rejected and Steps To Take Next
The first step in getting an online home loan after being rejected is to find out why you were rejected in the first place. Lenders have to give you a reason for denial, so ask for an explanation. Once you know the reason for rejection, you can take steps to address any issues that are preventing you from getting approved for a loan.
Check Your Credit Score
Lenders will first look at your credit score when deciding whether or not to approve you for an online home loan. A credit score of 750 or above assures lenders that you can repay the home loan rates and EMIs promptly. A poor credit score is often the primary reason for loan rejection.
Check your credit report and make sure there are no errors. If there are errors, dispute them with the credit bureaus. If your score is low because of missed payments or high credit card balances, take steps to improve your score before applying for another home loan.
Lower Your Loan Amount
Buying your dream home could also mean exceeding your budget. Every bank has lending policies that help them determine the maximum loan amount they can lend to you based on your credit score, income, and so on.
Lenders generally prefer that the EMIs do not exceed 40% of the net income. Applying for a lower loan amount with suitable home loan rates keeps your EMI payments within this range and increases your chances of loan approval.
First Repay Existing Loans
If you have several loans, adding another one, such as a home loan, could strain your finances when coupled with the home loan rates. The loan application process heavily relies on your existing loans and income. If your home loan application has been rejected, it could be because you are repaying too many loans in proportion to your income. Consider paying off some loans before reapplying for an online home loan. This will not only reduce your debt burden but also improve your credit score.
Check For Property Approval Issues
Lenders thoroughly scrutinize the property’s permits and approvals before sanctioning a loan. Your loan application could be rejected if there are any issues with these approvals. However, with the implementation of the Real Estate (Regulation & Development) Act 2016, new projects are launched with RERA approvals, reducing the chances of rejection due to property approval issues. Before reapplying for a home loan, ensure that the property has all the necessary permits and approvals.
Find A Co-Applicant
If your loan application was rejected because of a low credit score, too many existing loans, or any such reasons, adding a co-applicant can boost your chances of loan approval. A co-applicant is advantageous since the combined income of both applicants is considered, making higher loan amounts and home loan rates less of an issue. Lenders also take the credit score of the co-applicant into account, so if your spouse, parent, or sibling has a better credit score than you, add them as a co-applicant to improve your chances of getting a home loan.
How long after a loan rejection can you apply again?
If your loan application has been rejected, you may be wondering when you can apply again. The answer to this question depends on the lender and the reason for the rejection. Some lenders may allow you to apply again immediately, while others may require you to wait for a certain period of time before you can reapply.
It’s important to understand why your loan application was rejected in the first place. If it was due to a low credit score or insufficient income, it’s important to address these issues before you apply again. Improving your credit score or increasing your income can increase your chances of being approved for a loan in the future.
Additionally, it’s important to avoid submitting multiple loan applications in a short period of time. This can be seen as a red flag to lenders and may negatively impact your credit score. Be sure to research and compare lenders before submitting a new application, and only apply for loans that you are confident you can qualify for.
Does rejecting a loan affect credit rating?
When you apply for a loan, the lender will typically check your credit score and credit history. This is known as a hard inquiry, and it can temporarily lower your credit score by a few points. If your loan application is rejected, the hard inquiry will still appear on your credit report, but it will not have a significant impact on your credit score.
However, if you apply for multiple loans in a short period of time and are repeatedly rejected, this can have a negative impact on your credit score. It can be seen as a sign that you are a high-risk borrower and can make it harder for you to be approved for credit in the future.
In general, it’s important to be selective about the loans you apply for and to only apply for loans that you are confident you can qualify for. This can help minimize the impact of hard inquiries on your credit score and increase your chances of being approved for credit in the future.
Conclusion
If you review the things mentioned, you can get your next online home loan approved without any hassle. If you urgently need a home loan, you can always check with a different lender. Just because one lender rejected your application doesn’t mean another won’t approve it.
Also Read: Explore the Kingdom Valley Payment Plan 2023