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Practically all bankers base their appreciation first on the customer who has just solicited them. They give more importance to the customer than his project
If the banker has a bad opinion of the customer, even the best idea will not pass
The most common reasons banks deny loan applications are:
Here are 5 of some of the most common reasons why your home mortgage loan application could be denied:
1. Poor Credit History
Your credit history is a great way for a lender to tell whether you’re a risky investment or not. Lenders look not only at your minimum credit score, but also at whether you have a significant amount of derogatory remarks on your credit report such as a foreclosure or bankruptcy. But unless your credit is in really bad shape, you should be able to get approved for a mortgage loan. Today most lenders will consider a FICO score of less than 620 to be too low to get approved for a mortgage.
Luckily for homeowners, information on your credit is easily attainable, such as through the federally mandated website, www.annualcreditreport.com. Only once you understand why your credit score is so low can you begin to correct it. And more often than not, time is the only thing that will help.
2. Insufficient Income/Asset Documentation
A lender can tell if you’re able to afford a mortgage payment by looking at your income to debt ratio. While in your head you may earn enough to pay your monthly bills and a mortgage, if you can’t adequately document this income then you will likely get denied for a home mortgage loan.
Make sure to keep an accurate record of your finances and assets and document all of your income. Also, be prepared to show tax returns from the past several years.
3. Down Payment is Too Small
A lender looks at the down payment as an investment in their future home, so a low down payment does little to put their mind at ease. Therefore bigger is always better when it comes a down payment to satisfy your home mortgage loan application.
Typically, homebuyers will have to pay down payments that equal 5–25% of the total value of a home, but there are certain federally backed home mortgage loans that don’t require a down payment whatsoever. Don’t be scared of the inevitable down payment. Start saving now.
4. Problems With the Property
A denial doesn’t always have to do with the homebuyer. Sometimes a property’s value isn’t enough to back the amount of the mortgage loan being applied for, and therefore is denied. It’s not uncommon for a lowball appraisal to throw a wrench into a mortgage application.
As a borrower, you have the right to ask for an appraisal rebuttal, but rarely does this result in a higher appraised value for the property in question. A good way to solve this is to shop lenders.
5. Inadequate Employment History
A consistent employment history can be a very valuable thing when applying for a home mortgage loan. In fact, many lenders require two years of consistent employment before signing off on a loan. The reason is they want to know you’re able to hold down a job long enough to pay back the money they’ve loaned you.
Be sure to have proof of your employment as well, such as pay stubs or tax information.
If you’ve been denied for a home mortgage loan, chances are it was because of one of the above five reasons. Don’t be deterred, with a little patience and extra work on your end, you can put yourself in a position to get approved the next time you apply.
KYC and eligibility of the customer. Credibility.
1)you Have Too Much Debt
2)There’s an Error on Your Credit Report
1. Poor financial background2. Wrong information was given by customers found after verification3. IF the asset's value is lesser than the asset value required for loan4. Lack of trust such as no employment history5. If the client business is prone to face a loss
All bankers scrutinise applicant's loan applications before sanction/disbursement.
Probable reason for rejections are:
1. nature of business / activity or products manufactured/dealt with.
A credit proposal involving products or services, the demand for which is on decline is not worth considering. Or, similarly a proposal to manufacture/trade a specific product, when imported substitute is available in abundant quantity in the market at a very cheap price, is not a financially viable proposition, unless Government regulates the imports by imposing anti dumping duty or by any other methods.
2. Background of Borrower.
3. Account Conduct
4. Exisiting Limits: If a borrower is having limits with other bank, present level of limits together with past performance should be ascertained. Reason for new limits should be inquired and should be backed by proper reasons.
5. Purpose
6. Collateral Security Availability and its quality.
7. Business vintage
8. Quantum of Net Worth or Promoter's (Owner's) Money in Business, Whether the company has the policy topugh back the previous profits for future expansion.
9. Viability of the Business
are key determinants.
When the bank provides loan to customer in his or her business project , the bank becomes a partner to the business. Obiviously when some one gonna invest in the the business the prime concerrn is whether the business will be profitable and in this case can the bank earn its profit by means of interest , if not the bank will certainly refuse to invest or loan to the customer.
Secondly the like any other person bank also consider the credibility of the individual, firm or the company whether it has the intention to pay back or the means to pay back, if not then the annswer is no.
Bad credit rating or credit history along with inadequate repayment capacity. Also in many instance purpose of the credit facility may not fulfil the requirement of loan.
1. Cheque returns and past default histroy
2. Loss making business
3. Excess loan availed as compared to the capacity to repay
most common I would say they didn't come up with convincing guarantees , or maybe their bank account is enough or they had some red flags by the goverment
the bank if is a trap for loaning but for invistment is fine if you need finacial support you can use the bank to sell your company stock to the public as share holding so you minimise the risk loaning is the last chance for companies but still danger beacuse in make the prices of your products higher than the prices in the market
