10 Wonderful Tips To Boost Home Loan Eligibility
For most of us, getting a home is a dream come true. Everyone dreams of having their own house someday. But with rising property rates, owning an estate is becoming tougher. A home loan is a wonderful instrument that allows individuals, especially those with low incomes, to own a home. But here’s the twist: You can only get a home loan if you are eligible for one.
Financial institutions like banks or independent lenders have specific criteria for giving loans. These criteria help them determine the creditworthiness of the candidate. So, how can you improve your home loan eligibility? That’s what we are going to explore today. Below, we have shared the top tips to boost home loan eligibility.
#1 Improve your credit score
Banks usually check an individual’s credit score during the home loan evaluation process to evaluate their creditworthiness. You will not be denied a home loan if you have a good credit score. It boosts your home loan eligibility. You need to pay all your loan EMIs on time to improve your credit score. If you are paying your monthly installments and credit card dues on time, your seriousness will be reflected in your CIBIL score.
#2 Go for home loans with a longer tenure
An important factor directly connected with your EMI amount is the duration of your home loan. Generally, the longer your loan’s duration, the lower the EMI amount. With a lower EMI amount, it would be easier for you to repay the home loan on time. Lenders generally consider this probability when evaluating home loan eligibility. Therefore, try to apply for longer-term loans to boost your eligibility.
#3 Opt for joint home loans
Instead of taking out regular home loans, consider applying for home loans jointly. Having more than one earning member in your family considerably increases your home loan eligibility. When you co-borrow, it not only improves your loan eligibility but also divides the burden of EMI repayment with additional tax benefits. If you know about home loans, apply for them with your parents or spouse.
#4 Maintain your FOIR below 40%
Your Fixed Obligation to Income Ratio is a critical parameter that almost all lenders consider while calculating borrowers’ home loan eligibility. Most financial institutions require you to have 40%–50% of your monthly income devoted to living expenses. Ideally, if your house expenses match this requirement, the chances of home loan eligibility greatly improve.
#5 Choose the right lender
Lenders are the backbone of the overall lending process. However, due to the complex eligibility process, you might not be interested in home loans from banks.
That’s when independent lenders come in to fulfill your dream of getting a home. There are a plethora of lenders in the micro market with less complex home loan eligibility criteria. With a little research, you’ll be able to find them.
#6 Make patience your friend
It’s advised that you not hurry or panic when applying for home loans. Understand the market rather than rushing into any decision. You need to pay proper attention to some things when determining your estimated budget, calculating your income or earnings, and checking for errors in the CIBIL report. Spending time researching the market and evaluating lenders will help you get loans even with low home loan eligibility.
#7 Pay off all your debts
Your debt-to-income ratio is an essential factor that most lending institutions consider when evaluating the eligibility of applicants. The debt-to-income ratio refers to the total monthly debt you pay on your income. Your home loan eligibility rate will be low if you are already covering some financially heavy bills. Paying off your debts is the best way to ensure you remain eligible for a home loan. When you have no debt or low EMIs, your chances of getting a home loan improve greatly.
#8 Mention additional income sources
An excellent way to increase your chances of getting your loan approved is by declaring your additional income. Lenders base their lending decisions primarily on income. So, when you declare your additional sources of income, you give lenders surety that you can quickly repay them. Additional income sources, such as rental income, side businesses, freelance income, etc., can help you improve your financial health. Besides, having additional income can also help you get larger loans comfortably.
#9 Make a larger down payment
Most lenders or financial institutions finance home loans for approximately 75%–90% of your property’s value. You have to bear the cost of your remaining property. Someone can adjust that, but what about the principal value? If you don’t get it in the first place, your overall goal of getting the house will remain a dream. To ensure higher chances of loan approval, try to make a larger down payment. The higher the down payment, the lower the loan value and, therefore, the lower the payable interest.
#10 Avoid changing jobs
Are you a salaried person trying to get a home loan? If yes, make sure your job profile reflects your experience of not less than 2 years with the same company. Having frequent job changes in your application will hurt lenders. When it comes to salaried applicants, most lenders accept applications when the applicant’s income is stable. In other words, you have to show the lenders that you have a stable income, and having multiple job experiences contradicts that. Therefore, we suggest you show consistent work experience in your application. It will improve your home loan eligibility and, thus, your chances of getting a home loan.
Conclusion
Home loan eligibility is integral to determining whether you will get a loan. To increase your chances of getting a loan, you must improve your eligibility. In today’s blog, you learned the top 10 tips you can follow to boost home loan eligibility. Try them before applying for a home loan, and boost your chances of getting it!
Piramal Finance is a renowned finance company. You can choose from various financing options, such as home loans. They offer hassle-free, quick, and easy home loans with no foreclosure charges and zero repayments. So, what are you waiting for? For more details about their home loan process, visit their official website now!