Getting a home loan to buy your home involves a three-step process. First, you need to apply for the loan by filling up the application form and submitting the required documents. Second, the lenders assess the application form and sanction the loan. Third is when the loan is disbursed. While many of you know that your home loan application might be rejected in the first step, do you know that it might be rejected even after being sanctioned?
Yes, there are various reasons due to which lenders might reject disbursal of funds even after the loan has been sanctioned. Such reasons include the following –
Processing fee cheque dishonoured
The processing fee is payable through cheque along with the loan application form. If the cheque is dishonoured after the loan is sanctioned, the loan disbursal would be stopped after it has been sanctioned.
The value of the property which is being financed by the loan is determined by the bank after sanctioning the home loan. If the valuation done by the bank shows that the property is undervalued, your loan might get rejected.
Unapproved builder or project
Your home loan application is sanctioned based on your eligibility criteria and the documents submitted. However, lenders always assess the property which is being financed by the loan. If the property which you are considering is developed by a builder who is not approved by the bank, the loan would be rejected. Moreover, if the project is not approved or if it is located in an area which features in the lender’s negative list of areas, loan disbursal would not take place and the loan would be rejected post sanctioning.
Bad investigative report of the borrower
Even after you meet the eligibility criteria prescribed by the lender your financial history is investigated by the bank in details. Field investigators are appointed to find out about your income, liabilities, existing assets, savings, etc. If your investigation report depicts a bad financial position, the loan would be rejected. The lender would not take a risk in allowing a loan to you with a bad financial history.
Ambiguous property documents
The complete set of property documents are required to be submitted to the lender to avail a loan. If you have submitted incomplete forms or if the lender is not able to determine the legality or the legal ownership of the property, the home loan would be rejected. Until and unless all legal documents associated with the property being financed are available with the lender, the loan would not be disbursed.
Sanctioning of your home loan does not guarantee you the required funds. It is just a sign that your loan application is accepted by the lender and that the loan is under consideration. The loan can still be rejected due to any of the above-mentioned reasons even after it has been sanctioned. So, know these reasons and avoid them in your loan application to ensure that the disbursal of your home loan happens at the earliest.