• Pick the right bank and loan scheme: Read up on the various home loan schemes available in India, and the various banks and lending institutions offering them.
• Understand interest rates: Housing finance schemes are available in fixed, floating, and mixed-rate packages. Fixed packages come with a specific interest rate for the entire tenure of the loan, while floating packages are pegged to MCLR or Prime Lending/Board Rate, which means that they can change during the tenure. Mixed-rate packages offer a fixed rate for a specific period and floating rates thereafter. Choosing what works best for you and knowing why to choose one, will determine your monthly installments and the overall interest amount you pay to the bank.
• Understand other fees and charges: Different banks charge different amounts as processing fees. There are also charges such as prepayment fee, foreclosure fee, late payment fee, conversion or tenure restructuring fees, and legal fee that you need to be aware of.
• Check your Credit Score: Credit scores play a huge role in deciding your home loan eligibility. If you have a mediocre or poor credit score – lower than 700 – your home loan application may get rejected or you may end up paying a higher rate of interest.
• Understand foreclosure terms and conditions: If you intend to pay off your loan amount before the end of the tenure, then make sure that you’re finding out the foreclosure charges and the related terms and conditions. Certain banks allow free foreclosure of home loans, while others charge a specific pre-payment fee. Some banks may allow partial prepayments, while some may not. There might even be a period – may be the first year or first 3 years of the tenure, where you aren’t allowed to make any prepayments (also known as lock-in period).
• Buy a house you can afford: While owning a home is a dream come true, home loan is a responsibility you should take on only if you can afford it. Don’t take a loan way beyond your financial capacity. For example, if your household income is around Rs.70,000, then buying a house worth Rs.1 crore is not sensible. Firstly, you may not be eligible for a high loan amount and you would have to put in too much down payment. Secondly, even if you get an approval, you might have no money for anything after the EMI is paid.
• Choose a good builder: If you’re buying a new flat or an under-construction flat, make sure that you’re choosing a reputed builder. This is not just to ensure that you get high-quality construction, but also because lenders will approve home loans only if the builder is either well known or in their pre-approved list.
• Apply for a loan you’re eligible for: Check whether you meet all the eligibility criteria laid down by your institution or bank of choice. Also make sure that you have all the documents that the bank would require to approve your loan. Getting rejected will have an adverse effect on your credit score, so only apply for housing loans that are right for you.
• Choose your repayment tenure carefully: While being in debt for up to 30 years is daunting, shorter tenures mean higher EMIs. If your income isn’t aligned with the EMI amount, then go for a longer tenure or a step-up EMI. You can change the tenure later if your household income increases. Remember that delayed payments and defaults will negatively impact your credit score and worst-case scenario - lead to the bank confiscating your home.
• Read the fine print carefully: Reading everything mentioned in the home loan agreement and the MITC (most important terms and conditions) before signing it is very important, because a host of crucial information is listed there. If you’re unable to understand the jargon in the documents, let a private lawyer review it. If there are conditions you don’t agree with, check with the bank and seek further clarification or changes.

Reasons for Home Loan Rejection

Here are some of the reasons why a property loan could be rejected in India:

• The builder you’re buying the property from is not approved by the lender.
• The builder is approved by the lender, but the property is not recognised by the lender or government local bodies.
• You have moved too many jobs and are seen as unstable in employment.
• Your documentation was incomplete or are not matching with the information you provided in your application form.
• Haven’t found your reason here? Here are some more detailed reasons for home loan rejection.

How to Avoid Home Loan Rejection

To increase your chances of getting your housing loan approved, here are some things you can do:

• Do proper research on the property and builder.
• Maintain a good credit score.
• Apply only for a loan for which you meet the eligibility requirements already.
• Make yourself debt-free or make sure you have enough money to make home loan repayments.
• Provide all the right and relevant documents.
• Personal loan is a short to medium term unsecured loan granted to an individual. It is commonly used to meet such financial needs as debt consolidation, wedding expenses, unexpected medical costs, home renovation and others.