If your home loan application was rejected, there is no need to feel discouraged because it won’t make things better. The home loan lender takes a look at various aspects before granting you a loan. The primary reason behind this is home loan falls under a high-value loan category with a significantly long repayment period. Denying your home loan could be due to various reasons. It could be your credit score was not up to the SBI home loan CIBIL or your profile was lacking something in particular. Experts advise you to interpret “no” on your home loan application as “try again.” After your home loan lender has denied your loan application request, the following critical measures can help you get your dream home.
Examine the specifics of why the lender rejected your home loan application: A generic letter indicating refusal is typically sent by the home loan lender. Do not allow disappointment to impair your judgment. Instead, you should strive to find out why your house loan application was turned down. In most cases, lenders will let you know why your application was rejected. This is to assist you in correcting the mistakes and reapplying so that you can obtain the loan. Call or visit the bank and try to find out the specific reason why the lender rejected your loan application in case the letter does not state the reason. It is easy to apply for a home loan application again in the hope it will be accepted, only to get disappointed again because you didn’t correct the issues. Doing so repetitively can also impact your credit score when you do an SBI CIBIL score check. Knowing the reasons will properly prepare you for your loan reapplication.
Reduce the loan amount: The likelihood that the lender will reject your loan application when determining your loan eligibility is high if your monthly income is insufficient to cover the necessary home loan amount. In these situations, it is advised to revise the loan amount in order to correct the debt servicing ratio, which will give the lender assurance of your ability to repay the loan. Your ability to obtain a new loan may also be impacted by having too many loans already in your name because it will raise your debt service ratio (DSR). If your DSR exceeds the lender’s standards, your application is likely to be rejected.
Pay off existing debt: If you already have multiple loans on your head, there is high chance that your home loan application will get declined. From a lender’s perspective, your present payment responsibilities will limit your repayment capacity for your home loan EMI. Additionally, the lender believes that having more debt will raise the likelihood of you missing a payment. In this case, paying off a few of the current debts is your best resort for giving them the assurance that you can handle your debt. It is important to have a low debt-to-income ratio when applying for a home loan apart from fulfilling the SBI home loan CIBIL. A high debt-to-income ratio means that your debt payments and responsibilities are greater than your current income.
Check your CIBIL score: Lenders rely on your CIBIL score and report since it gives them insight into your credit history and behaviour. Every home loan lender has their own specific credit score range they go and the same applies to SBI home loan CIBIL.
If your credit report reflects a delay in making payments and defaults, it will have a negative impact on your home loan application, which is frequently the key factor in house loan rejection cases. In such circumstances, get a copy of your CIBIL score and get expert guidance on how to raise it. The more you work to raise your CIBIL score, the higher your chances are of obtaining a home loan approved. Improving your CIBIL score takes time for the revised results to take effect; hence, check the SBI CIBIL score check before you send your home loan application.
Double-check your paperwork: To process your home loan application, financial institutions follow a predetermined set of documentation guidelines that every home loan borrower has to follow. In general, a lender will provide you with a list of documents to submit with your application when you contact them along with SBI home loan CIBIL score requirements. These documents provide all the necessary data that the home loan lender needs to process a loan. Even a small mistake can impact your application. All necessary legal documents along with the requested information by the lender must be verified by applicants. You can seek legal assistance if any crucial property documents are missing or contain inaccuracies.
Review your finances: According to a lending institution’s standard operating procedures, the serviceable EMI component is often between 60 and 70 percent of your monthly income. So, when applying for a home loan, be sure to provide the appropriate documentation to prove your income. The lender might advise you to choose a smaller loan amount if they have concerns about your ability to repay the loan. As a co-applicant, you can add another family member to the income pool as a co-applicant with a better SBI home loan CIBIL. Applying with a cosigner or providing collateral may help to support your application and the lenders’ faith in your ability to repay the loan.
Lower your loan-to-value (LTV) ratio: Increase your down payment to lower your LTV. Many banks do not want an LTV ratio of up to 80% or more since a house loan with a greater LTV ratio is regarded dangerous for this reason. In some cases, some lenders might raise the cap to 90%, although doing so comes with a risk. Pay a higher down payment to increase your chances and show the lender that you are a low-risk borrower.
Reduce liabilities: It’s crucial to consider your Fixed Obligations to Income Ratio (FOIR). This includes the amount of your take-home pay and accounts for all monthly debts. When determining the loan EMI, lenders take into account 40% of the in-hand salary. Living expenses make up the remaining 60%. Therefore, getting a new loan is challenging if your present debts are already depleting your 40%. Make sure your other debts are paid off and you do not already have a big financial obligation before reapplying.
Even though applying for a house loan is quite simple, there are a number of reasons why it can be rejected. So, if your house loan application was rejected as well, it’s not the end of the road. Simply review your home loan application and finances again and submit a new application. It’s crucial to understand that previous loan application rejections have a negative impact on your overall score when you do a SBI CIBIL score check, so it’s essential to plan your upcoming loan applications carefully.