Best Tips to Increase Your Home Loan Eligibility

7 Tips to Increase Your Home Loan Eligibility

Banks go through a meticulous process to determine a borrower's eligibility for a home loan.

Based on the applicant's profile, which includes their income, type of employment, credit score, and other factors, the bank or lender also determines the eligible maximum amount and interest rates.

By enforcing the following tips, you can understand how to increase your home loan eligibility for swift approval-

• Choose An Extended Home Loan Tenure

A longer-tenure Home Loan can be used to boost home loan eligibility. Although a longer-term Home Loan lowers your EMI, it raises your total home loan interest payable. As a result, you must account for a higher borrowing cost while opting for a long payback period.

• Make An Effort to Cast Down a Higher Down Payment

A banking firm or lender provides financing for a House Loan between 75% and 90% of the home's appraised value. Even so, you might be responsible for paying the balance.

Lower down payments result in higher loan values and, consequently, higher interest payments. Therefore, making a larger down payment is always advised to avoid paying higher home loan rates of interest.

You may also want to know the Best Home Loan in India

• Pay-Off All Outstanding Debts & Loans

The debt-to-income proportion is crucial for financial institutions to assess a Home Loan applicant's eligibility.

Therefore, it makes sense for a candidate to pay off all debt since this will increase their eligibility for a Home Loan. In addition, they will need to raise their credit score by paying off outstanding debts.

• Consider Opting for Joint Home Loans

If your family includes multiple earners, opting for housing loans jointly dramatically increases your chances of becoming eligible for more loans.

The best action would be to submit a Home Loan application with your partner, parents, or both. The benefits of co-borrowing include increased home loan eligibility, shared repayment responsibility, and tax advantages.

Your EMI becomes more manageable if you have a co-borrower with good credit, which improves your eligibility to qualify for a Home Loan.

• Make Sure That Your Credit Score Has Improved

Home Loan eligibility is continuously increased by having a high credit score. However, to accomplish that, one must ensure that all loan repayments are completed on time.

While your credit score will be positively affected if you are punctual with your credit card payments and monthly instalments (EMIs), on the other hand, your credit score is negatively affected by any delay or fallback. The bank typically checks your credit score when you apply for a Home Loan to evaluate your creditworthiness.

Banks and other financial institutions use a range of credit bureau scores. There is no required minimum score for Home Loans, but a score of 750 or higher is typically considered favourable for loan approval. Low-interest rates on Home Loans are another benefit of having a good CIBIL score.

Also know How to Improve your Credit Score in India

• Proclaim Any Additional Income Sources

When you disclose your different income sources, your Home Loan eligibility increases.

Therefore, you should add some other source of income because it will help you secure a more significant loan amount. Examples of additional sources of income include rental income, a side business, etc.

• Avoid Frequent Job Switches

If you are a salaried individual arranging to apply for a home loan, you must have two years of continuous employment with the same company.

Regular job changes affect the amount of eligibility for Home Loans. Therefore, preparation should begin as early as possible so that you can demonstrate two years of unbroken service to an organization. 

Conclusion

When you follow the suggestions above to increase your chances of being approved for a Home Loan, you can easily qualify for a more significant loan amount, a more extended repayment period, and more excellent terms and conditions.

Start the process by raising your credit scores and, if necessary, correcting any mistakes. Then, maintain a low debt-to-income ratio while actively saving for a down payment on the house of your dreams.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.