10 Reasons your housing loan application gets rejected

Aug 14, 2021 by AmwalCom

Getting a housing loan is one of the biggest decisions you might want to make n your life. Before making this decision, you need to ask yourself some questions:

• Are you able to have your monthly payment paid on time along the loan term period? Would you need to get another loan later? Does your DBR allow you to get another loan?
• Do you have a down payment? Do you have work stability to ensure you have a consistent income to pay off your debt?
  
• Are you sure of the house you would like to buy? Would you need more money for renovation or furniture?
  

If you are sure of the points above, then you would need to look for a bank that can grant you the loan and to know your chances of getting one.

There are higher chances that your housing loan application gets rejected due to a lot of reasons some of which might be known, and others need some clarification. Here are the 10 reasons your housing loan application gets rejected in Jordan:

1- Sector

Your chances of getting a housing loan in Jordan increases if you work in the public sector because of the work stability the public sector employees gets in comparison with the other sectors. If you are a private sector employee however, there are extra points to check by the bank.

2- Monthly Income

Your net salary has to be higher than the minimum salary required from the bank to get the loan. The minimum salary is usually higher for private-sector employees than public sector employees. For business owners, you need to have a commercial register and a profession license in addition to a bank statement for at least the last 6 months. Bear in mind that most banks ask that the business has been operating for at least 2 years and that the monthly salary is higher than 1000 JDs/month.

3- Company Accreditation

You do not need to worry if the company you work for is not accredited by any of the banks. This is because most banks ask for a salary transfer and a higher salary instead, if the company is not accredited (the house is mortgaged when getting a housing loan making it relatively easier to get one if your company is not accredited)
Interest rates are sometimes lower for employees working for a company accredited by the bank. In general, the public sector entities (retired, military, government) are accredited by all banks

4- Salary Transfer

Salary transfer is a must for housing loans by most of the Jordanian banks. Therefore, you need to ask your company about the possibility of having a salary transfer if needed.

5- Downpayment

Most banks ask for a 10-20% downpayment for most of the sectors. For example, if the house is 100,000 JDs and the downpayment needed is 10%, this means you will get a loan for 90,000 JDs and you need to provide the 10,000 JDs in cash.

6- Age

Age is an important factor given the long-term period for housing loans. Most banks ask that the borrower age by the end of the loan period does not exceed 65-70 years old. For example, if you are applying for a 30-year housing loan and your age at the beginning of the period was 45 years old and the bank policy you are getting the loan form is asking for a maximum age of 65 years old by the end of the loan. This means that the maximum period for your housing loan would be 20 years instead of 30. The loan amount, the monthly payment, and your DBR will differ accordingly and so there is a chance your application gets rejected if you do not meet the criteria. 

7- Loan Amount

If the loan amount you are asking for is higher than what you can get, the bank might reject your application or ask you to provide a higher downpayment. Your age and your DBR might be the reason behind that as explained above.

8- DBR

DBR is your ability to pay based on your monthly income and it does not exceed the 50% of your income maximum usually. For example, if your salary is 1000 JDs/month and the DBR the bank is asking for is 50%, then you can get a loan with a maximum monthly payment of 500 JDs. The loan amount you can get is calculated accordingly.
You can learn more about the DBR from this video

9- Social Security

Banks look at your net salary registered in the social security. If you are not part of the social security programs, your application will most probably get rejected.
Most banks ask that your social security subscription is no less than 3 months for the public sector and 6 months for the private sector.

10- Credit Report

If you were late in paying off your previous debts, this will show in your credit report and makes it very hard for you to get a new loan.
You can get your credit report from CRIF for free once a year. You can also ask for your report from the banks’ mobile applications.

Each bank has its own policies, and your application might get rejected for reasons other than the listed above. We advise you to make sure you can commit to paying your housing loan.

You can compare between housing loan offers in Jordan, here