Most homebuyers have to apply for home loan plans for financial assistance. If you are thinking about applying for a home loan, too, do note that it is crucial to focus on your eligibility for a home loan before doing so. This is because lenders decide whether to approve or disapprove your loan application based on specific eligibility criteria. These eligibility criteria will impact even the loan amount.
The good thing is that there are ways in which you can improve your eligibility for a home loan. This can help you get a higher loan amount and better terms on your home loan. So, take a look at a few ways in which you can effectively boost your housing loan eligibility:
1. Try giving a higher down payment
A home loan does not cover 100% of the property cost. Financial institutions can only fund up to 75%-90% of property value, depending on the loan amount. The remaining amount will have to be covered by the borrower. If you are looking to boost your eligibility for a home loan, try and put down a higher down payment. By doing this, you will need a smaller loan amount, reducing the lender’s risk.
2. Take a home loan with a co-applicant
You and your co-applicant should have a stable income while applying for a home loan. From a lender’s perspective, two borrowers repaying one loan is better than an individual borrower repaying it. This reduces the chances of repayment problems, as two borrowers are earning an active monthly income.
3. Maintain a decent credit record
No matter what type of loan you go for, keeping a good credit score is very important. Financial institutions check their applicants’ credit records before deciding whether to approve or reject their applications. Ideally, it is considered best to maintain a credit score of 750 or more.
4. Opt for a long repayment tenure
A longer tenure means smaller monthly installments, making it easier for borrowers to pay them off. This is also a positive sign for the lender as it reduces the chances of the borrower defaulting on their EMI payments. So, choosing a long repayment tenure can boost your home loan eligibility.
5. Clear any existing dues
Already having existing debt is never a good thing while applying for a home loan. If most of your monthly income is already being spent on clearing debt, it might become difficult for you to take on another loan. If you are looking to boost your home loan eligibility, it is better to clear all your existing EMI obligations before applying for a home loan.
You can increase your chances of getting faster loan approval with the tips mentioned above. It is also advisable to use a home loan eligibility calculator to understand the loan amount you are currently eligible for. This way, you will know the loan amount to apply for, reducing the chances of loan rejection.