Over the last two years, home affordability has risen enormously, with loan interest rates falling to their lowest. And if you are planning to buy a home now, you would like to get the best possible loan ever. But if you’re a first-time home buyer, it is important to do some research on home loan eligibility.
Banks and non-banking finance companies can ascertain the maximum loan amount through home loan eligibility. This determines the amount of loan an applicant can borrow by assessing her trustworthiness of paying back.
This determination is made based on various elements, including:
- Term of loan
- Credit score
- Repayment capacity
The lenders conduct a detailed analysis of the eligibility of a home loan applicant. Nevertheless, home loan applicants must understand the ways of enhancing their home loan eligibility.
This article will give you valuable insights regarding the ways to improve your home loan eligibility. Keep reading until the end to learn the exact ways of improvement.
Improve Your Credit or CIBIL Score
Your credit or CIBIL score plays a pivotal role in determining whether your loan will be approved. A credit score above 750 is considered good and makes you creditworthy. Also, you become a risk-free borrower.
Choose a Longer Tenure
Choosing a longer tenure for your home loan will give you a long time to repay your loan. Thus, the possibility of on-time loan repayment also increases.
Choose Pre-Paying Your Existing Loan
If you have any outstanding loans, make sure you repay them before applying for a new loan. When your lender finds out about your existing unpaid loan, then he might significantly reduce your loan amount. Also, there are greater chances of increasing the interest rate and sanctioning your loan.
Add Other Sources of Income
Adding other income sources can also help improve your home loan eligibility. It can either be rental income, machinery or equipment rent, or even business. An additional source of income gives you a greater advantage in securing higher loan amounts, thereby improving your financial health.
Choose Opening an Account with the Chosen Lender
After finalizing the lender, you can choose to open an account with the lender itself. Thus, you will be given significant preference by the chosen lender whenever you apply for any loan in the future.
Incorporate Spouse Name as Co-Applicant
If your spouse is working or has an incredible credit score, you can choose them as your co-applicant. So, your joint home loan might result in a greater loan amount that the respective bank will sanction. Also, by adding names and income, you can deliberately increase the sustainability of home loans. Moreover, you will get them at incredibly lower interest rates.
Opt for Step-Up Loans
If you have a significantly lower monthly salary, then a step-up loan is always a better option. It is also ideal for those who find it difficult to repay high loan EMIs for other monthly expenditures. Under this loan, some lenders offer significantly lower EMIs in the initial years. Eventually, the EMI amount is increased as the borrower becomes financially secure for repaying outstanding loans in the later years.
Never Rush, Hurry, and Panic
While applying for a home loan, ensure that you never panic or hurry. Also, timely and adequate research is essential before applying for a home loan. And estimating your budget, calculating your earnings, comparing loan options, and checking your CIBIL reports are equally important.
Before applying for a home loan, you should also choose your desired interest rates with minimum additional charges.
Considering the tips mentioned above will efficiently help you improve and increase your chances of home loan eligibility. Also, you can become eligible for a higher loan amount with better terms and conditions and extended tenure. Remember to commence this procedure by fixing any errors and improving your credit scores.