Many people find that despite having adequate income, the bank rejects their loan application. In most cases income is not the problem — hidden pitfalls are, ones most people do not even know about. Here are the 5 most common mistakes.
1. Too many loan applications in a short time
If you submit loan applications to several banks at once, that hurts your credit score. Banks can see that you are trying elsewhere too.
Solution: first get pre-qualified with a single bank, or ask a loan broker for help.
2. Inadequate proof of income
Banks scrutinise proof of income strictly. This is especially true for KATA entrepreneurs, who are assessed using the NAV (the Hungarian tax authority)/12 formula.
Solution: some banks use a more favourable formula. Ask an adviser to help with the income calculation.
3. Active KHR (the Hungarian credit registry) listing
If you appear on the KHR negative list, almost every bank rejects you automatically. But there is an exception: those with a passive KHR status can get a loan at certain banks.
Solution: clarify your KHR status. If it is passive, there is a solution.
4. Too much existing debt
The JTM (debt-to-income ratio) limit means your monthly instalments may not exceed a set percentage of your income.
Solution: with refinancing you can merge your existing loans into a more favourable structure.
5. Missing documentation
During loan assessment the bank asks for a number of documents. If any is missing, the process stalls.
Solution: prepare everything in advance. A good loan broker helps put the document list together.
Rather not be rejected? Request a free consultation.
