Best Ways to Improve Your Home Loan Approval Chances

Last Updated : March 25, 2016, 9:52 a.m.

Buying a property for investment purpose or for residential purpose is a long time decision. It can take years and years to get your dream of buying a property materialise. Buying a property require huge investment. There are many people who want to acquire a property for residential or investment purpose, but they don't have enough funds to buy that property. In such a situation home loan is a rescuer for those people.

Although rate of property are rocket high and today people take a well learned decision before investing in a property. There are many housing societies, which offer you pre-approved home loan to buy the property. But if you are investing in some other places or homes/apartments/commercial and office space you need a loan to buy that property. Once you apply for a home loan you need to take care of few things to get a clear passage for approval of your home loan. However, the norms and terms of the home loan has been eased by the government in recent years, but don't assume it a cake walk. One small mistake or wrong document can land you into trouble. Here are some best ways to improve your home loan approval possibilities.

Improve your low credit score: Banks take consent of your low score, if you have a low or bad credit score, there are high possibilities that your home loan application will get rejected. If you are fulfilling all the conditions and having a good salary and funds, but you have a bad credit score or low credit score there are high chances that bank will not consider your application. Credit score plays a crucial role when it comes to loan disbursal.

Factors behind bad credit score

1. Defaulted or delayed payments of any loan or credit cards
2. Guarantor to a person who defaults on payment of his loan can affect your credit score
3. Performance in ongoing and closed loans
4. Taking unsecured loan frequently

If you are planning to take a loan in near future, and you have a bad or low credit score, work upon the factors to improve your chances to opt for a loan. Make timely payments of your credit card or other outstanding. Pay your loan EMIs on time without any defaults. Don't apply for any other unsecured loan for some time to improve your credit history.

Wrong personal details: Your credit information contains your personal details such as your full name, contact details, and other personal and professional information. Therefore, if you have furnished wrong information in your application or credit report it can lead to application rejection. Thus, while applying for a loan just check all the documents, which you are enclosing with your application must be having the similar information such as your name, initials, signature, professional details, salary and bank documents, age proof etc. You can get a credit report by paying the nominal fee to credit bureaus to check any anamalies in your details and documents. If you find any difference in your personal and other details you can get them rectified by applying for same.

Application rejected by some other banks: If you are so desperate to borrow a loan you generally end up applying to various banks at the same time. Although you should always keep this in mind if your loan has been rejected by some other bank, then it can impact your credit score. It can also lead to application rejection in other banks as well. Therefore, it is recommended that you should apply for the loan at a single bank at a time. If your application gets rejected in one bank at least you will be able to figure out the reasons behind the application rejection and you can rectify the issues in your next application to improve your chances.

New or unstable job: The main concern of any lender is to get the timely repayment of their loan. Before lending you a loan, the financial firms or banks always check your financial stability and strength. If you are new in your job or you are on contractual job, it will affect your application status. If you frequently change your job, but you are earning good salary, still there are chances that your application might get rejected. Those who are working in start-ups or small companies with employee strength of less than 50 face issues in getting a home loan.

Age factor: While you are applying for loan the banks and financial firms consider your age also while disbursing the loan. If you fall under the bracket of 60-65 years of age there are chances that you will get the minimum amount as home loan. Because of the age factor most of the banks will not give you a higher amount of loan.

Applying with friends and relatives: If you are applying for a home loan with your friend or relatives there are chances that your application might get rejected. Banks consider spouse, children and parents as co-borrower in home loan and give them first preference. Banks don't consider clubbing the income of your relatives and friends in home loan apart from your spouse, parents and son, or if the co-applicant is a minor.

Location of the property: If the location of the property is disputed and falls under areas where banks are not permitted to disburse the loan in such condition your application might get rejected. If you are buying an under-construction property at a disputed place, there are chances that your application might get rejected. Choosing a location at a remote area or undeveloped areas are at higher risk of negative technical evaluation of the property by the bank. Therefore, it is really important that you choose a location, which is not disputed and have good value and resale value as well.