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Is your home loan eligibility getting in the way of securing affordable housing finance? We can help you! Your loan terms and conditions will directly dependent on the various eligibility conditions set by the lender. So, follow these tips to boost your loan eligibility and get a desirable house loan.
#1. Improve your credit score
Lenders prefer applicants with a high credit score as it indicates a higher repayment capacity. According to CIBIL, a leading credit bureau in India, 79% of the loans are sanctioned to people who have a CIBIL score of 750 and above. Thus, having a high credit score will boost your loan eligibility and help you get competitive home loan interest rates.
#2 Get a co-applicant
Getting a co-applicant with a good credit score can improve your loan eligibility favourably. In the case of a joint loan, lenders consider the monthly income of both applicants, which translates to enhanced eligibility. Besides, you can also borrow a larger amount as having two applicants also increases your home loan EMI affordability.
#3 Payoff your debts
Before applying for your home loan, pay off your existing debts, including credit card bills. This will bring down your credit utilisation ratio, the amount of debt you currently owe divided by your total credit limit.
Lowering this ratio has multiple benefits. Firstly, it will improve your chances of approval as lenders prefer applicants with a credit utilisation ratio of about 30%. It also enhances your repayment capacity, which allows you to receive a higher loan amount. Lastly, it also boosts your credit score.
#4 Show additional sources of income or assets
In addition to your primary income source, show any additional income sources you may have. These sources could be stocks, fixed deposits, mutual fund dividends, rental income, etc. You can also share the details of any high-value assets you may have. A higher-income source or high-value assets will showcase a higher loan repayment capacity, thus boosting your loan eligibility.
#5 Choose a longer tenure
A longer loan term as compared to a short one will result in relatively low EMIs. You will have enough time to repay the loan without compromising your monthly expenses, thereby reducing the risk of loan default. However, a longer loan term can result in paying higher interest amounts over the loan tenure, depending on the terms and conditions.
So, before applying for a loan, you should use a home loan EMI calculator to check your potential monthly instalments and plan your budget.
Final thoughts
Taking a loan for buying a house requires careful planning and research. So, before applying for a loan, make sure you use these tips to improve your home loan eligibility. Doing so help you secure an affordable loan quickly.
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