We always hear our friends’ loan being rejected by the banks. Everyone is worried that if they were to buy property they might get their loan rejected. Well, I have gone through 20 years in mortgage industry. I have experience the good and bad times. Even at bad times banks still lend.
Today every 10 cases submitted more than 5 being rejected. Some banks are even higher. I believe that if you learn why a bank can reject a loan, you will be in a better position when you apply a loan. I will share with you in this article through my experience what mistakes do the borrowers make during loan application process. There are many reasons but I will share the most common ones
1.Income too low
Many times I noticed that borrowers bought properties they could not afford. The margin of finance also are up to the maximum. With this and couple with other debts their ratio will be too high for the bank to approve.
2.Too high Debts
There are 2 type of debts. The good and the bad. Bad debts such as credit card and personal loans can cause the rejection of the loan. For instant, the banks take 5% of your outstanding amount in credit card to calculate. If the borrower utilize more that 70% of the card limit they are deem high risk by the bank.
3. Installments not promptly paid
With the advancement of technology, banks can now check on the repayment frequency of the borrower. If a borrower always pays late for the facility it will be shown in a system called Central Credit Information System (CCRIS). Banks will reject the loan if there are any late payments.
4. Positive in Credit Tip of System (CTOS)
This is manage by a private company. The system will show if the borrower is been sued. It will show who sue, legal firm involve, hearing date and etc. Once the borrower is listed in CTOS, this can cause them the loan rejection.
To be continued