Risk factors for failing to get a home loan

home loan

Want to apply for a home loan but concerned about the factors that might lead to a loan rejection? Today, we will reveal the risky factors that could result in your home loan application being denied. Each of these factors negatively affects the evaluation conducted by the bank, and they can apply to both Thai citizens in Thailand and Thai citizens living abroad. So, if you’re looking to buy a house or a condo, you should avoid these risky factors.

Why might your home loan application get denied?

Buying a house, whether it’s purchasing a house, a condo, or building your own, is a dream for many. However, it’s not an easy task, especially if you have limited income and significant monthly expenses. In such cases, applying for a home loan through a bank is often the only option.

However, securing a home loan isn’t straightforward because banks consider multiple factors before approving a loan. It’s not as easy as getting a loan for other purposes. Let’s get to know the three risky factors that could result in your home loan application being denied:

Unstable or Irregular Income:

Your income is a critical factor in the bank’s evaluation. If your income is unstable or irregular, such as having high income in some months and low income in others, or if you don’t have clear income documentation, your loan application might be rejected. To improve your chances, it’s essential to have a steady and documented income for at least 6-12 months before applying for a home loan.

High Debt Burden:

Many loan applicants face rejection due to excessive debt burdens, such as multiple car loans, numerous credit card debts, or outstanding housing loans or condo mortgages. If your total debt exceeds the percentage set by the bank (usually around 60-65% of your income), it’s advisable to reduce your debt burden before applying for a home loan.

Poor Credit Score or Being on a Credit Blacklist:

A poor credit score or being on a credit blacklist, known as “ติดบูโร” or “ติดแบล็คลิสต์” in Thai, can significantly impact your ability to get a home loan. Negative credit histories, such as late credit card payments or outstanding debts, can lead to a credit blacklist. Even small amounts of unpaid fees or interest can have this effect.

Tips for Thai Citizens Abroad: How to Secure a Home Loan Approval

Currently, the Government Housing Bank (GH Bank) has launched a program to help Thai citizens living abroad apply for home loans in Thailand. To be eligible, you may need to meet certain conditions, such as providing income documentation from abroad. You can apply for such loans through companies like “Sun Gateway Co., Ltd.,” which acts as a representative of GH Bank.

Here are some tips to increase your chances of getting a home loan as a Thai citizen abroad:

  • Maintain a stable and continuous source of income.
  • Ensure your legal status as a Thai citizen living abroad.
  • If the main borrower is a housewife with no income, you can use your foreign spouse’s income as proof.
  • Manage your expenses to reduce your financial burden.
  • Prepare all required documents as per the bank’s requirements. Thai citizens abroad may need to provide additional documentation compared to those in Thailand.
  • Follow the advice of the bank’s staff, including proper document signing and using the correct pen color.

In conclusion, if you find that none of the three risky factors apply to you, then you are well-prepared to apply for a home loan and have a higher chance of approval. For those who have one or more of these risky factors, it’s essential to address them promptly if you want to turn your dream of owning a home into reality.