A Golden Guide to Understand How You Can Increase Your Home Loan EligibilityMortgage Rate Lenders & Home Loan BanksUpdated on Mar 20, 2020 View more like this | Visit India, UN | Contact Anamika Verma |
Secured loans such as home loans come with big loan amounts and long repayment tenors which can be used only to purchase a residential property. Provided by multiple financial institutions, individuals avail such loans to make residential property purchases. They also mandate specific home loan eligibility which prospective buyers are required to fulfil for the property purchase.
Loan applications are not guaranteed and it is vital for every single individual to meet the requisite criteria of a specific lender. Although such housing loan eligibility criteria vary, here is a basic guide to help you crack the eligibility pointers of nearly any HFC in India and avail a loan the best possible terms.
Simple and easy ways to increase eligibility for a home loan
Increase credit rating
A high credit rating is one of the crucial home loan eligibility criteria. In India, above and around 750 is considered an adequate credit score to avail any financial aid. Financial organisations acknowledged individuals with higher CIBIL score as risk-free borrowers. So, it substantially increases the credibility of loan applicants.
*Individuals can enhance their credit score by –
Repaying dues timely.
Keeping the credit utilisation ratio of less than 60%.
Not applying for several credits at one time.
Carrying a well-managed credit history without any default.
Furthermore, individuals with a high credit score can even negotiate the loan interest rate with the lenders. So, they must need to be regular with the repayment schedule and build up a high credit rating.
*Choose a longer repayment term
Opting for longer repayment tenor increases home loan eligibility of borrowers. With longer tenors, the EMIs become lower and more comfortable thereby reducing chances of missing out on one.
*Avail with co-applicant
Another effective way to enhance home loan eligibility is to avail a joint home loan. Individuals can add their spouse, parents, siblings or other working family members’ name as co-applicants to avail the benefits of a joint home loan. So, the total income of borrowers will increase, and that helps to avail higher loan amount and reduced interest rates. From the lender’s point of view, joint loan applications enhance the EMI affordability and make the loan approval easy.
*Add various income sources
Loan eligibility also depends on the Fixed Income to Obligation Ratio or FOIR. So, a higher income helps borrowers escalate their eligibility. Borrowers with additional income such as rental income, any business earnings, investment returns, etc. can secure a higher home loan amount. They need to submit valid proof of extra earnings along with home loan documents to their preferred financer.
*Open account with the chosen finance provider
Financial institutions prefer their existing customers when it comes to provide finance. Thus, once loan aspirants have selected lenders, it is preferable to open an account with their opted financer before applying for the loan. By doing it, individuals can start the relationship with their preferred financial organisation and increase home loan eligibility to the specific lender.
*Make sure the property is high-value
Lenders prefer financing high-value properties. Those with amenities such as community hall, jogging park, sports academies, etc. are considered as properties which will scale in value. A property which will appreciate in value can be liquidated without inciting a loss-making proposition, reducing the risk of the lender in case of a default.
Furthermore, HFCs also prefer to finance individuals who are opting for well-known projects and reputed builders. This also lowers the financial risk of the lender.
Lastly, individuals must assess the entire budget, estimate income and check for home loan eligibility criteria before applying for a home loan. Also, thorough research on the loan provider is needed. Borrowers only need to follow these steps to avail a home loan in India easily.
Similar Read: Know What Is Home Loan Eligibility and Ways to Improve It
Loan applications are not guaranteed and it is vital for every single individual to meet the requisite criteria of a specific lender. Although such housing loan eligibility criteria vary, here is a basic guide to help you crack the eligibility pointers of nearly any HFC in India and avail a loan the best possible terms.
Simple and easy ways to increase eligibility for a home loan
Increase credit rating
A high credit rating is one of the crucial home loan eligibility criteria. In India, above and around 750 is considered an adequate credit score to avail any financial aid. Financial organisations acknowledged individuals with higher CIBIL score as risk-free borrowers. So, it substantially increases the credibility of loan applicants.
*Individuals can enhance their credit score by –
Repaying dues timely.
Keeping the credit utilisation ratio of less than 60%.
Not applying for several credits at one time.
Carrying a well-managed credit history without any default.
Furthermore, individuals with a high credit score can even negotiate the loan interest rate with the lenders. So, they must need to be regular with the repayment schedule and build up a high credit rating.
*Choose a longer repayment term
Opting for longer repayment tenor increases home loan eligibility of borrowers. With longer tenors, the EMIs become lower and more comfortable thereby reducing chances of missing out on one.
*Avail with co-applicant
Another effective way to enhance home loan eligibility is to avail a joint home loan. Individuals can add their spouse, parents, siblings or other working family members’ name as co-applicants to avail the benefits of a joint home loan. So, the total income of borrowers will increase, and that helps to avail higher loan amount and reduced interest rates. From the lender’s point of view, joint loan applications enhance the EMI affordability and make the loan approval easy.
*Add various income sources
Loan eligibility also depends on the Fixed Income to Obligation Ratio or FOIR. So, a higher income helps borrowers escalate their eligibility. Borrowers with additional income such as rental income, any business earnings, investment returns, etc. can secure a higher home loan amount. They need to submit valid proof of extra earnings along with home loan documents to their preferred financer.
*Open account with the chosen finance provider
Financial institutions prefer their existing customers when it comes to provide finance. Thus, once loan aspirants have selected lenders, it is preferable to open an account with their opted financer before applying for the loan. By doing it, individuals can start the relationship with their preferred financial organisation and increase home loan eligibility to the specific lender.
*Make sure the property is high-value
Lenders prefer financing high-value properties. Those with amenities such as community hall, jogging park, sports academies, etc. are considered as properties which will scale in value. A property which will appreciate in value can be liquidated without inciting a loss-making proposition, reducing the risk of the lender in case of a default.
Furthermore, HFCs also prefer to finance individuals who are opting for well-known projects and reputed builders. This also lowers the financial risk of the lender.
Lastly, individuals must assess the entire budget, estimate income and check for home loan eligibility criteria before applying for a home loan. Also, thorough research on the loan provider is needed. Borrowers only need to follow these steps to avail a home loan in India easily.
Similar Read: Know What Is Home Loan Eligibility and Ways to Improve It
