Those applicants that failed to get the loan approve are due to the reasons as below:
- Debt service ratio (DSR) – Knowing the ratio of your debt to income is important and key in getting your loan approved. This is a formula used by banks to evaluate your affordability level. ( Formula : [Total Commitment + New Application] / Net Income ). This has become the most common rejection reason for housing loan applications. Different banks have a different DSR cut-off or capping (eg: 60%, 70%, or some even up to 80%).
- Stained credit score – Central Credit Reference Information System ( CCRIS ) report shows the records of the applicants. If the credit score is lower than expected by the lender, high chances are the application will get rejected. It is crucial for you to repay all your other mortgages on time (car loans, student loans, credit card debts) as they will stain your clean record and stay there for at least a year if you ever delayed the payment.
- Bankruptcy – Once you go into bankruptcy, the record is going to stay in your CTOS permanently. And the lenders will give a frown at your loan application. Most banks are highly alerted once they get to know your "blacklisted" status, even after you are no longer bankrupt.
- Incomplete required documents or submit wrong documents - This is actually the 2nd popular reasons for getting the application rejected. Please check the required documents well and prepare everything.
- Income insufficiency or instability - If you have been changing jobs in the recent years, there are chances that it could affect your score for the housing loans as they deem you to be unstable enough to repay the mortgage on time.
- Apply loan within the period of employment less than 6 months - same reason as above.
