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Tips to Increase Your Home Loan Eligibility
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Due to high real estate prices, many people rely on home loans to buy their dream homes. With these, you need not exhaust your savings and can repay the amount comfortably over the tenure. However, your eligibility plays a crucial role in loan approval. Home loan eligibility criteria is based on your age, income, qualification, job profile, credit score etc. If you fail to meet even one of the eligibility criteria, the lender can reject your loan application.
If you have been planning to avail a housing loan, here are some tips to boost your eligibility.
The lender gauges your creditworthiness and repayment capacity through your credit score. Therefore, you must maintain a high credit score. Experts opine that you must have a credit score of 700 and above if you want to avail a home loan at attractive interest rates. A healthy credit score can improve your home loan eligibility and even help you avail a high-value loan. The following tips can help you improve your credit score.
Do not exhaust your credit card’s maximum limit and preferably maintain a low credit utilisation ratio.
Avoid applying for multiple home loans simultaneously. Check your credit report regularly to identify discrepancies. If you find any, request the credit bureau to rectify it.
By availing a home loan with a co-applicant, you can enhance your home loan eligibility. You can take a joint loan with your spouse, brother and parents. The eligibility of the co-applicant is added to yours, increasing the chances of approval. However, the co-applicants must have a high credit score. Both you and the co-applicant can avail tax benefits on loan repayment.
Your existing loans would increase your debt-to-income ratio, affecting your eligibility. Clear off all your previous debts. If you have existing loans, you can prepay them or avail a consolidated loan. Similarly, you must avoid defaults on credit card bills. Once you pay all your debts, get it updated in the credit report and ensure to take a no dues certificate from the lender.
Including additional income sources can help you enhance your home loan eligibility. If you earn interest income or income from a business, you can use it to enhance eligibility. In addition, if you have a second home, you can rent it out and add the rental income to the monthly cash inflows.
Opt for a longer tenure. A longer tenure can increase your repayment capacity as you get a longer time to repay the loan. However, you must know that a longer tenure will increase your interest outgo and thus, your total cost of borrowings.
Time to follow the above-mentioned tips; because, a high home loan eligibility can increase the chances of loan approval and help you get low home loan interest rates.
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