It goes without saying that property prices in Dubai are on the higher side, and it’s difficult for a salaried person to own a home here. However, home mortgage loan options offered by many banks and private lenders have helped a lot of people realise their dream of becoming a homeowner in this beautiful emirate.

However, the process of obtaining a home loan isn’t exactly easy either. Picture this: You have finally found your dream dwelling; the excitement, understandably, is touching the sky. But your hopes and dreams can shatter into pieces if the home mortgage loan application is rejected.

To ensure you do not face such a situation, follow these effective ways to avoid getting your mortgage loan application rejected:

Ways to Avoid Mortgage Loan Application Rejection

Keep Your Debt-to-Burden Ratio Low

The debt-to-burden ratio (DBR) plays an integral part in determining the fate of your loan application. If it’s too high, the bank is going to outright reject the mortgage loan application and vice versa.

For the uninitiated, it is the ratio of the monthly instalments you are liable to pay against your monthly income. Simply put, it is a kind of affordability test carried out by lenders. They conduct it to know if you can repay the loan amount or not. If 50% of your salary/monthly income covers your liabilities, you are in a good position to get your mortgage loan application approved.

So, prior to applying for the loan, conduct a thorough analysis and audit of your financial standings. Get rid of existing loans. This will significantly help in lowering your DRB and, subsequently, brighten the chances of mortgage loan approval.  

Maintain High Credit Score

This is important not only in Dubai but in various other parts of the world. As a matter of fact, it is one of the first few things that the lender scrutinises when you apply for the loan. If the credit score is low, the chances of getting mortgage loan application approval become bleak.

A credit score is allotted based on the credit history. You can know in detail how it is calculated here. If you have been paying your bills on time and are good with your credit card use, you won’t face any problems in maintaining a decent credit score. On the other hand, if you regularly delay payments and have a lot of outstanding bills, your credit score is going to suffer. This, in turn, will make it difficult to get your mortgage loan application approved.

If you have a bad credit score, it’s important that you improve it before applying for a mortgage loan. There are many tips you can follow to improve your credit score.  

Pass the Stress Test

A stress test is carried out by the lender to check if the borrower can cope up with the fluctuating interest rate. This basically ensures them that the borrower will be able to make payments even if the interest rate increases. This test is also measured against the applicant’s finances.

It’s difficult to overcome the stress test as every lender has its own specific criteria for it. However, getting to know about their process in advance can give you a head start. You can manage your finances accordingly, so even if they set the interest rate higher, your DBR stays below the threshold level.

Be Truthful

The biggest mistake you can make when applying for a home loan mortgage is to lie about your financial status or misrepresent any other detail. Always remember that the lender needs to be sure of your creditworthiness. And for this, they will research you thoroughly. In case they find out about your misrepresentation, it can cost you a lot.

So, if you’re thinking about not disclosing your true employment status or the loan you took but failed to pay years ago, drop this idea. Be truthful and disclose all details to your lender.

Meet the Eligibility Criteria

Every bank and the private lender has an eligibility criterion that the applicant has to meet to get their application approved. This criterion differs from lender to lender. However, there are some common terms/clauses that are available in every lender’s criterion. These mostly pertain to the applicant’s age, nationality and income.

Usually, you need to be at least 21 years old to apply for a mortgage loan. Most banks also set an upper age limit. Furthermore, the country you belong to also matters. Banks in Dubai usually do not lend money to expats belonging to sanctioned countries. The list of these countries can change, and it differs from bank to bank. Other than that, different banks have different requirements with regard to the applicant’s income and their assets.

It’s important for you to meet the eligibility criteria. Otherwise, your application wouldn’t even move to the next stage. However, bear in mind that banks tend to be a quite strict vis-à-vis fulfilling the criterion. So, if your application gets rejected due to not meeting the basic requirements, you can always contact a private lender. However, remember that they charge a comparatively high rate of interest.

The Takeaway

We hope that these tips will help you to get your mortgage loan application approved. Once the bank has accepted it, you will be given a pre-approval letter. You can then start looking for a residential property in Dubai that meets your needs and falls within the budget range. To find the best property listings, visit Zoom Property or download our mobile application. 

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