Home loans are a convenient tool to help you buy your dream home. With home loans, you can purchase your property and pay for it in easy installments. Moreover, you can choose the tenure and EMI as per financial compatibility. However, to get a home loan, your application must be approved by the lender. Typically, lenders review your home loan eligibility when you submit the application form. If you have low eligibility, your application can be rejected. Even if they accept the application, you could get higher interest or a low loan amount. Therefore, if you are planning to avail a home loan, you must have a high eligibility.
Here are the top five ways to enhance your home loan eligibility in India.
- Improve your credit score
The credit score reflects your repayment capacity and creditworthiness and is a crucial eligibility criterion. Check your credit score and ensure that it is above 700 if you want to avail a home loan. If not, you can take steps to improve it. Following are some ways through which you can improve your credit score.
- Pay off your debts and keep debt-to-income low
- Pay your EMIs and credit card dues on time
- Review and rectify credit report
- Do not apply for a loan with different lenders simultaneously
- Add a co- applicant
Lenders club the income of all the co-applicants when reviewing the application. Therefore, availing a joint home loan can enhance your eligibility and help you get a higher loan amount. You can also share the repayment burden with the co-applicant(s).
- Choose a known lender
If you have a bank account, see if you can take a loan from them. Having a good relationship with your lender can help you enhance your eligibility and get better deals. If you do not have a bank account, it would be best to open one in your preferred bank a few months before applying for a loan.
- Declare additional income
While filling out the application form, declare all the additional sources. Having a higher income will indicate your higher repayment capacity and enhance your home loan eligibility. You can declare sources like interest income or rental income.
- Choose your tenure carefully
Shorter tenure can help you repay the loan faster. However, it also converts to higher EMI and more chances of defaults. Instead, a longer tenure helps you repay comfortably. If you have applied for a high loan amount with short tenure, it can affect your repayment capacity and thus your eligibility. Opting for longer tenures reduces the risk for the lender and facilitates better eligibility for you. However, you must know that you will have to pay a higher interest for a longer tenure.
Along with the aforementioned tips, you can also increase your home loan eligibility by paying a higher down payment for your loan. Higher down payment will reduce the loan amount and risk for the lender. Also, avoid changing your job if you are planning to avail a home loan soon. Consider these factors when you apply for home loan and get the best terms and loan offer with high eligibility.