Factors that can assist you to improve your home loan eligibility include:
Opt for longer Tenure
When you extend the loan term, your home loan eligibility improves because the lender will see that you have a lot more time to repay the loan. As a result, the chances of prompt loan repayment increase. Longer-term loans allow the borrower more time to repay the loan, resulting in timely repayment and lowering the lender’s risk.
Prepay existing loan
If you already have a loan in your name, try to pay it off before applying for a new one. Due to non-payment of an existing loan, the lender may reduce your loan amount or offer you a loan with a higher interest rate. The lender may believe that the borrower is already overburdened with loan EMIs and that authorizing an extra loan will result in EMIs being delayed or not paid at all. In this instance, the lender may even deny the loan.
Improve Credit Score
The credit score, often known as a CIBIL score, is crucial in determining loan acceptance and loan amount. A credit score of 750 or more is considered excellent, indicating that you are a creditworthy and risk-free borrower for the lender. According to CIBIL (Credit Information Bureau (India) Limited), “persons with a CIBIL Score of greater than 750 are accepted for 79 percent of loans or credit cards.” Low home loan interest rates are available when you have a good CIBIL score.
Add another source of income
Adding another source of revenue can also be beneficial. Rental income, part-time business, rent from equipment or machinery, and so on are all additional sources of income. An additional source of income enhances your financial health, allowing you to secure a larger loan amount.
Include spouse name as co-applicant
A working spouse or a spouse with a decent credit score might be added as a co-applicant for a joint home loan, resulting in the bank or NBFC authorizing a larger loan amount. Co-applicants can include spouses, family members, and siblings, as adding them to the loan boosts the EMI affordability. Some lenders take into account the combined income of family members. As a result, by adding names, the income could significantly grow, resulting in the approval of a home loan with low-interest rates.
Open an account with the lender
If you’ve decided on a lender and want to apply in the next year or less, you can begin your relationship with them by creating a bank account well before you apply for a loan. If you do this, the lender you choose will give you a priority if you apply for a loan in the near future.
Consider set-up loan
People with lower net monthly earnings or those who find it difficult to afford high loan EMIs due to other monthly costs can consider a step-up loan. Step-up loans allow relevant lenders to give loans with lower EMIs in the beginning and progressively increase them when the borrower’s financial situation improves, enabling the borrower to pay back the outstanding loan balance in the future
Do not panic or hurry
Applying for a house loan should not be rushed or fraught with anxiety. Before applying for a house loan, do your homework and take your time. Before applying for a house loan, estimate your budget, calculate your wages or income, check your CIBIL report for faults, compare loan choices, pick between fixed and fluctuating interest rates, and choose desired interest rates with minimal additional charges.
Conclusion
Taking out a home loan has traditionally been one of the most difficult and significant financial decisions a person can make. Thus, following these simple procedures will undoubtedly assist you in raising your home loan eligibility and enabling you to purchase the home of your dreams.
