When a home loan application says “no”, the borrower should read it and “try again”. It is the responsibility of the borrower to mention all the details which should be true and correct. And this article will tell you what to do after your application gets rejected.

What to do after the rejection of the home loan application?

Go through the details

  • The letter that is issued by the lender for conveying the loan denial which would most probably be a generic one. Try to understand the reason for rejection.
  • If the letter does not specify the same, you must speak to the concerned officials.
  • Keep asking questions until you understand the exact reason for not granting the loan.

Reduce the loan amount

  • If the lender found, upon an assessment that the monthly income is not sufficient to support the loan amount, then the application may get rejected.
  • In such cases, the borrower is supposed to rework on the amount which is to be borrowed.
  • By reducing the loan amount the debt servicing ratio can be easily corrected.
  • That would make the lender confident about the loan repayment ability.
  • The borrower can get a home loan at cheap rates.

Pay off existing debts

  • If you have already availed multiple loans, then the chances of your existing monthly payment obligations that are getting in the way of the home loan approval would be high.
  • This would basically lead to a high debt-income ratio. This means that the debt obligations and the repayment commitments at that time are more in comparison to the income.
  • Any more debt obligations would put the lender at risk.
  • Paying off the existing debts is the best alternative to rectify this situation.

Work on your CIBIL score

  • Lenders would rely on the CIBIL score for a home loan to understand your credit history and your credit behavior.
  • Delay and defaults in repayments harm the CIBIL score.
  • A poor score is a reason which is enough for rejection.
  • The borrower is supposed to obtain a copy of your CIBIL report.
  • He is required to Seek expert advice if it is required and he is also required to work towards improving the CIBIL score.
  • The borrower must ensure timely repayment of the existing debts and he must close open issues if any.
  • You must begin the damage control now and should approach the lender again with a favorable score.

Valuation of security

  • The valuation amount may not be sufficient security for the loan amount in question and the fact that it may lead to rejection.
  • However, you must understand that the valuation amount sometimes differs from one lender to another.
  • It depends upon the lender policies and the third party evaluating it.
  • In case, you are certain that the security provided is being undervalued then you should consider seeking the opinion of another lender. That way either you will get your home loan approved from the other lender or you would know that the additional security is needed to be arranged.

Adjust and make it work

  • The main factors at play when it comes to the home loan numbers are
    • The loan amount
    • The rate of interest, and
    • The tenure.
  • The EMI to work out according to your income, either the tenure can be increased or the loan amount that is to be borrowed can decrease.
  • You must keep your mind open to all the alternatives.
  • You must also look out for a new property that can thus be more affordable and you must check with the other lenders for better home loan rates.

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