Has Your Home Loan Application Declined? Don't Panic and Follow These Tips

Posted by mymoneymantra on May 15th, 2018

Home Loan Application

Purchasing a house is more than just buying a place of your own. It is also one of the most significant financial transactions of your life. Having the required funds to back you up without sabotaging future financial commitments is essential. Given this scenario, going in for a Home Loanmakes the most sense. If buying a house of your own has always been a lifelong dream of your own as well, it is disappointing when your application for a Home Loangets rejected.

Your loan may have been rejected because your details do not satisfy the requirements of the lender. Problems can occur in the form of a bad credit score, a Home Loan is applied for a project that falls under restricted area, bank approval of the project does not come or bad credit history in general. Whatever be the case, you need not panic. Here’s what you can do if you are facing a similar situation as well.

Why a Home Loan is rejected and what you can do?


To gain Home Loan eligibility, complying with certain factors is necessary. Here is what you can do if your loan is rejected due to the following factors.

  • A bad credit history: If you are going through a bad credit history, settling your dues with your financer is the best way to go about with the same. After this, obtaining a ‘no dues certificate’ is imperative. Once all of the dues are settled, advancing to the Home Loan provider and re-applying for the loan is the best thing you can do.
  • Issues pertaining to project approval: If there are problems related to project approval, requesting your chosen Home Loan provider to approve the project is advisable. If this is not acceptable, just going in for a project that has already been approved by them is your best bet.
  • A bad credit score: Settling any previous or present dues ensures a clear slate. This helps in upgrading your credit score. As time passes by, this score only gets better since the dues get cleared systematically. Clearing your debt eventually plays a role in helping you gain a Home Loan.
  • Possessing lower financial eligibility than the necessary loan amount: If your Home Loan application is rejected due to lower financial eligibility than the loan amount, contact the Home Loan provider and see whether stretching the loan for a longer tenure works. This helps in reducing EMIs (Equated Monthly Instalments). If you already have an ongoing loan, closing the loan to enhance financial eligibility is sensible. This is particularly the best when the ongoing loan has a higher interest and lasts for a short duration. Adding a co-applicant or guarantor also works since it helps in enhancing income. You can even try looking for other lenders who approve the application although this happens at a higher charge since risk is high. Adding a guarantor along with additional collaterals also has its perks.  


These tricks help in turning a Home Loan rejection upside down. Taking an objective view of the situation is important if you want to rectify the situation in a desirable way.

Re-applying for a Home Loan

Looking into the following aspects is significant if re-applying for a loan is part of your plan –

  1. Ask your lender for details

You cannot know for sure why your Home Loan Application is Declined unless you ask your lender about it. This is the most beneficial way of determining what has gone wrong. It gives you a clearer understanding of the cause of the problem so dealing with the same becomes easy. Reapplying for a loan then becomes easier, to a certain extent.

 2. Dig deeper into the specifics

Your lender may not give you a detailed report of why the Home Loan is rejected. The report sent to you is generic which makes deciphering the reason for denial unclear. Once the lender informs you about what went wrong, focusing on the problem and trying to get rid of the same should be your primary focus.

 3. Other tips to keep in mind

Try to minimize other obligations, so you have enough money to repay a home loan. Identify a pre-approved property by the lender and preserve a good credit score for eligibility. Refrain from making too many inquiries for loans and seeing that you maintain a clean banking record is a must. For instance, avoid cheque bounces as it gives out an undesirable impression to the lender.

Make certain that you have relevant papers, and nothing is missing. If a key document is missing, you can consult a legal professional regarding the same. A home loan application rejection is not the end of the world. You can quickly set right your issues so that when you are re-applying for the loan, things work out in your favor.

Also Read : 5 Types of Loans to Make Your Life Easier Financially

To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 60+ Banks and NBFCs. We have served 2 million+ happy customers since 1989. 

Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers. 

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Joined: April 6th, 2018
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