Good salary no guarantee for home loan approval

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While applying for a home loan, many borrowers know that disputed title of the property or inadequate salary compared to the amount of loan being applied for can be reasons for rejection of loan application. However, here are a few lesser known reasons that can ruin your chances of getting a home loan

Inadequate work experience

Many times individuals start exploring buying a home immediately after landing into their first job. However, most lenders will prefer at least three years of work experience. Some may still consider lending if you have worked in one company for at least two years. Some lenders may consider lending if you have a professional degree and at least two years of work experience. Do not give token money to buy a home in a hurry just because you landed a good job straight out of college. Lenders may want to see you stabilize as an employee. Too many job jumps, even if they come with salary hikes, can raise a red flag for the lender.

Low educational qualification

This is especially true if you are a salaried individual. Though there is no assurance that a graduation or a professional degree ensures employment, most banks would be cautious to lend to those with lower than a graduate degree. Lenders often look at the presence of a graduate degree or a professional degree as an assurance of getting a job quickly, in case of loss of job which in turn would ensure that the repayment obligations will be met at all times.

Number of dependents

If you have more than three persons as financially dependent on you, then lenders may do see you as a good customer. More responsibilities mean you may have to allocate your resources accordingly. Lenders do think that too many dependents may ensure that timely home loan repayment may take back-seat.

Too many co-applicants

Many a time individuals prepare to buy bigger houses to ensure that they stay with their parents and siblings and their families. But though banks would like to see a happy family staying together, they might not like to see too many of them applying as co-borrowers for the house they want to live in. If you are applying along with your parents, siblings and their spouses, then it is a crowded situation from the lender’s point of view. Banks look at too many co-applicants as a source of future disputes or litigations and avoid such home loan applications.

Failed repayment on other loans

When you are applying for your home loan, ensure that you are paying all your existing loans on time. Avoid any situation of bounce of EMI mandate for want of funds. If you are using a credit card, then pay the entire sum outstanding on the due date. Avoid revolving credit. If you are making payment using cheques, ensure that the payments go through. This is especially true for the cheques given to the lender for payments of processing fee or for payments towards legal dues.