5 Reasons Why Your Home Loan Application Is Getting Declined

Getting a home loan is a crucial move. After all, repaying it lasts for a couple of decades. As meticulous as you may be in choosing a home, the lender will apply the same rules in deeming you worthy of loan approval.

If you’re planning to buy property in Dubai, here are some things that might be the reason for your loan application to be rejected.

1. You Have an Unstable Employment History

Financial institutions have a lot of risks with home loans. There’s no one way to lessen the burden except to make sure you are, in fact, in a position to pay the loan.

To do this, financial institutions will review your employment history. If you’ve had jobs that changed frequently, you may have to explain why or even disclose the previous employment to your lender. If a financial institution does not like your explanation, you might find yourself in a tough spot.

2. You Have a Weak Credit History concerning the Home’s Value

If you want to get a home loan in Dubai, the lender must see that you can afford your home. It does not matter how much you can borrow. Instead, it matters how much the home costs.

Hence, the lender will check your credit history. If your credit is not strong enough and you can only afford a home with only a few million dirhams, you will have a hard time getting a loan.

You will also have a hard time getting a loan if you want to get a home loan with bad credit. At least make sure that your credit is good enough to meet your loan needs.

3. Your Application Information Is Lacking

As a prospective home buyer, you must provide financial statements and other documentation to your mortgage lender. This is necessary to determine your financial status and ability to pay your home loan.

If you do not submit the requested information on time and as instructed, this may result in your application being rejected.

4. You Made a Misrepresentation Mistake

Misrepresentation is a no-no in getting a home loan.

When you make the application, the lender will ask you questions about your income. For example, if you’re a civil servant, the lender may ask you how much money you will be getting in the next three months.

If you give an answer that is not accurate in the eyes of a financial institution, you will not just be denied a loan. The financial institution may also charge you.

The same thing happens if you lie about the property you wish to buy. The lender will often ask for documents that verify that you indeed own the property.

5. You Failed Your Lender’s Stress Test

The stress test is an essential factor in getting a home loan. It determines the property’s affordability.

For example, if your mortgage loan calculator said you could afford a home worth Dhs 1,125,000, but your financial status can only afford homes worth Dhs 900,000. Your lender might reject your application even though you can pay the Dhs 1,125,000 loan amount.

Final Thoughts

Getting a home loan is not a simple task. It’s a big decision made for the rest of your life. If you want to make sure that you’re getting your money’s worth, then you must be extra careful.

Are you looking to invest in residential properties in Dubai? Dacha Real Estate is your bridge towards owning a piece of the rising world-class business hub. Check out our listings on the site or send us a message for more information.