Six reasons why your home loan can be REJECTED

Buying a dream house is one of significant goals in everyone's life. If you are planning to buy a house in the near future, make sure you start exploring pre-conditions you will need to satisfy to apply for home loan and be prepared about the same.

1. A good credit score is of course one of significant deciding factors. Make sure you have a good credit score in place so as to brighten the prospects to get a loan. How can you achieve that? Make sure you pay your credit card dues in full and on time.
Use your credit card very meaningfully. In case you want to avail a substantial loan, you may need to increase your income level and also maybe clear all your outstanding loans. Bills or repayments you've missed or paid late will show on your credit file and even the smallest blemish can adversely affect your chances of getting a home loan.
Try to clear all your other loans on time without any delay, and try not to have any records of outstanding debts when you submit your application.
Of course this is not the only factor which banks take into consideration while evaluating your loan application. You should be aware of all such factors so as to obtain the loan without any kind of bother:

2. Job stability
If you are a frequent job-hopper, you may start with bit of disadvantage. Bank evaluates your ability to pay back the loan without any default and job stability is the prime concern for most of the banks. Frequent job hops may imply instability and could very well become a reason for rejection of your loan application.
Banks place a very high value on job stability and can imply that an applicant needs to be employed with a particular company for a certain minimum period to be eligible for a home loan. The period usually varies from one to three years. Provide reasonable explanations for gaps in your employment history, and also explain why you've changed jobs where you have.
What you can do is to stick with a company for more than a year if you plan to take a loan in near future. If you want to switch jobs, do so after your loan is sanctioned. As you gain experience, it will be better to stay more with a company to account for job stability. Banks consider it as strong evidence that you'll have the income to meet your monthly commitments and it's one of their prime considerations when approving a loan.

3. Be ready with complete details of your investments
Each bank has its own policies when it comes to evaluating a loan application. Make sure you have complete details of your existing investments such as equity and mutual fund portfolio, fixed deposits, PPF and EPF statement, any existing property details or in addition proof of your pre-payment ability.
All these factors play a significant role in strengthening your case of home loan application.
Do demonstrate through your application to the lender that you are capable of managing your finances and meeting commitments.

4. Residential address in defaulter's list
If you live in same house as someone who is a loan defaulter, make sure you completely clarify your case to the bank as it could lead to your loan application being rejected. Do convince the bank that the defaulter is not dependent on you and you are not at fault in any way.
The defaulter can very well be a family member or a relative who may have slipped up on a loan payment or may not have paid credit card dues and hence reported to National Credit Bureau.

5. Application has been rejected earlier
Most applications look into rejected home loan applications while evaluating your home loan application. What you need to do is not to apply for home loan in all banks at same time.
In any case, if your application is rejected, you can rectify your errors before you approach the other lender. If you are not aware of reason of rejection of your home loan application, make sure you take it up with the concerned bank and find out the exact reason.
In certain conditions bank may be willing to reconsider its cases but very selectively.

6. The property you want doesn't satisfy bank's policy guidelines
Not all types of residential property are suitable security for a loan. Lenders prefer properties that are easy to sell, are in demand, are simple to value, and tend not to fluctuate too much in price.
In addition, choose the right builder so that you don't face any problems when it comes to verifying your property. The builder should have all the necessary documents and the required number of approvals for this phase to clear smoothly.
If the documents are not in order or if there's a problem with the title or layout, your home loan application can be rejected.

If you're serious about a property, check early with your lender that the property makes an acceptable security for a loan. If it doesn't, ask what other types of security might be acceptable (such as a second property), or look for something more mainstream.

Must dos before you apply for a home loan:

• Ensure you are aware of all the documents required and have then in place. Check out with relatives and friends who have taken loans and understand the process.
• Get your credit report from CIBIL and evaluate if there is any factor that may cause the banks to reject your loan application
• Check if your co-applicant has a clean credit history before applying for a joint loan. If you are opting for a guarantor, ensure he/she has a high credit score.
• Do a deep analysis of offerings from various banks. Each bank will have a different set of criteria. You may be eligible for a loan at one bank based on your profile and documents, while others may reject you. So, compare before you apply. In addition, some public sector banks may require you to go through lot more documentation then some private sector banks. However private sector banks may charge you for the same. So evaluate all the options accordingly.

In nutshell, loans are often rejected when the lender perceives that there is a probability that the borrower will default on repayments. It is in their interest that banks perform a background check on most loan applicants.

In addition to above causes -- submitting incorrect information to the banker, wrongly filling the application form can also be a possible cause for rejected applications. Further, the property for which one seeks a loan must not be under any legal dispute and must have clear title.

If the borrower's income is too low and s/he seeks a large loan, banks are likely to reject the application. Ideally, the monthly repayment amount must not be greater than 30 percent of monthly take-home salary.

Make sure your tax return isn’t rejected

If you are e-filing your tax returns, here are the errors you should avoid while sending the ITR V

 In the previous issue of ET Wealth, we laid out a systematic approach to filing tax returns. However, your return can be rejected if the guidelines laid down by the Income Tax Department are not followed while filing returns, be it physically or online. If you are e-filing and not using the digital signature, you will have to print out the acknowledgement form, ITR V. Here are the things you should keep in mind while using this option.
Printing ITR V
Printing the ITR V form correctly is critical. Avoid using the dot matrix printer if you want your return to be processed faster. This is because the bar code on the ITR V should be clearly visible for quicker processing, and this can be done only by using the ink jet or laser printers. Take the printout in black ink only. If you are sending two returns, don't print them back to back. Use a fresh A4 size sheet to print each time. Perforated paper or of any other size is not acceptable.
Signing
The signature on the form must be clear and legible. For this, use a ballpoint pen in blue ink only. "The document that is mailed to the Central Processing Centre (CPC) in Bangalore should be signed in blue ink," says Parizad Sirwalla, executive director, tax, KPMG. Also, if you are taking photocopies, make sure you send out the original one signed in blue ink. "As per the guidelines issued by the Income Tax Department, the ITR V should carry the signature in ink and should not be a photocopy," says Sonu Iyer from Ernst & Young.
Sending
"The filing of non-digitally signed returns is completed only when the ITR V reaches the CPC in Bangalore," says Sirwalla. So, make sure that your ITR V reaches the destination within 120 days of e-filing. In case it does not reach CPC Bangalore within the stipulated period, you will have to go through the agony of filing your tax return again. Earlier, you could not send more than one ITR V per envelope, but now, you can include more than one such form. Do not attach other documents, such as photocopies of Form 16 or TDS certificates along with the ITR V. Even annexure documents don't need to be attached. Dispatch it in an envelope that can hold an A4 size paper without folding it.
Other filing errors
Taxpayers often make mistakes that lead to deduction or incorrect calculation of taxes. One of these is not declaring the correct break-up of deductions under Section VIA, which includes tax-saving investments in life and health insurance policies, mutual funds, bank fixed deposits, etc. Iyer points out, "It is essential to have the tax filing details like deductee's PAN details, PAN & TAN of the deductor, total amount paid, total taxes deducted and deposited in Form 16/ Form 26AS."
    In case of a change in the residential address, make the necessary alterations in the PAN database since the IT Department refers to it for correspondence. Do not mention bank accounts that are closed or even dormant because refunds are unlikely to reach you in such a case. "The circles in the Sahaj and Sugam forms must be shaded, not ticked," says Ameet Patel, partner at Sudit K Parekh & Co.
No response from CPC
The CPC dispatches an acknowledgement on receiving the ITR V. Ideally, it should reach you within three days. If you don't receive it, consider sending it again. You can send it through regular postal service or speed post. Do not use the courier or deliver it personally. You can call 1800-425-2229 and 080-22546500 from 9 am to 8 pm on working days to check its status. It can also be done online at www.incometaxindiaefiling.gov.in.
E-filing checklist

•   Avoid copy-pasting information while e-filing.
•   Take printouts using ink jet or laser printer on A4 size paper in black ink.
•   Sign on the ITR V acknowledgement form in blue ink only.
•   Avoid the use of staplers in ITR V.
•   You can send more than one ITR V form in the same envelope.
•   Do not attach any other document with the ITR V.
•   ITR V should be sent to the Bangalore CPC via speed post or ordinary post within 120 days.
•   Do not courier or deliver the ITR V by hand. It won’t be accepted.

 Extracts from TOI