Applying for a home loan is a very tedious procedure. It takes a lot of your time and effort to get all the legal documents ready. However, not all home-loan applications go through and your application gets rejected. Here are a few reasons as to why your home loan application has been rejected.
𝟭) 𝗜𝗻𝗰𝗼𝗺𝗲 𝗰𝗿𝗶𝘁𝗲𝗿𝗶𝗮 𝗮𝗿𝗲 𝗻𝗼𝘁 𝗺𝗲𝘁
A common reason for your bank to reject your home loan is often because your income does not tally with your loan amount. Simply put, it means that the bank thinks you cannot afford the loan. For example, your monthly income could be RM3500 but your loan repayment per month is RM3000, so would it make sense for the bank to approve the loan for you?
𝟮) 𝗧𝗵𝗲 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿 𝗼𝗿 𝘀𝗲𝗹𝗹𝗲𝗿 𝗵𝗮𝘀 𝗯𝗲𝗲𝗻 𝗱𝗲𝗰𝗹𝗮𝗿𝗲𝗱 𝗯𝗮𝗻𝗸𝗿𝘂𝗽𝘁
Banks check all ongoing legal proceedings or for bankruptcy using a system called Credit Tip-Off System (CTOS). If your developer or seller has declared for bankruptcy, the transaction will not be approved by the bank. So it’s always cautious to check by yourself before applying for the home loan.
𝟯) 𝗧𝗵𝗲 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿 𝗵𝗮𝘀 𝗯𝗲𝗲𝗻 𝗯𝗹𝗮𝗰𝗸𝗹𝗶𝘀𝘁𝗲𝗱 𝗯𝘆 𝘁𝗵𝗲 𝗯𝗮𝗻𝗸
Each bank has its own record of developers that they have blacklisted. Most of the time the list varies from bank to bank. Each bank usually has their own reasons as to why a specific developer has been blacklisted. Much like the above-mentioned reason like bankruptcy, other reasons may include being sued in court or have a bad track record with that bank.
𝟰) 𝗡𝗼𝘁 𝘀𝘂𝗯𝗺𝗶𝘁𝘁𝗶𝗻𝗴 𝘁𝗵𝗲 𝗿𝗶𝗴𝗵𝘁 𝗱𝗼𝗰𝘂𝗺𝗲𝗻𝘁𝘀
Submitting the right documents should be given the topmost priority when you apply for a home loan. It is absolutely essential to have all the right documents including everything related to income.
Some important documents that you should submit to the bank in order to ensure that the home loan application process goes smoothly include, salary credit bank statements and the booking form by the property developer. Do make a note to double-check simple things on your application forms like your address and contact number.
𝟱) 𝗬𝗼𝘂𝗿 𝗽𝗿𝗼𝗽𝗲𝗿𝘁𝘆 𝗵𝗮𝘀 𝗮 𝗹𝗲𝗮𝘀𝗲𝗵𝗼𝗹𝗱 𝗼𝗳 𝗹𝗲𝘀𝘀 𝘁𝗵𝗮𝗻 𝟯𝟬 𝗼𝗿 𝟲𝟬 𝘆𝗲𝗮𝗿𝘀 𝗼𝗳 𝘁𝗲𝗻𝘂𝗿𝗲
This reason solely depends on the bank. Some banks do not finance loans on properties with a remaining lease of 30 or 60 years. The bank views this type of property as “high-risk financing” as the property value itself drops towards the end of the lease.
If your loan is to get rejected, don’t lose all hope. You might not be able to tick all the boxes at one bank but that does not mean that you won’t be approved at the next one. Most of the reasons stated above depends on the criteria each bank has set for itself. However, it is important to note that you will have to wait 3-6 months before your next home loan application.