According to a recent report, housing loans have witnessed an upsurge in demand in the past few months. Lending institutions have reduced home loan interest rates and made it more affordable to subsist with this change.
This feasible borrowing rate indicates a good time to invest in a house with external monetary backing. However, accessing this credit form requires fulfilling certain parameters set by lenders to remove the concerns of credibility.
These home loan eligibility criteria usually include financial security, income stability, age, credit score, debt to income ratio, etc. Qualifying these parameters would help an applicant in acquiring substantial credit and affordable EMIs.
Here are some proven factors to help potential applicants improve their eligibility for a housing loan.
How to increase home loan eligibility effortlessly?
- Improve CIBIL score
CIBIL score and credit history are the two essential parameters considered to assess an individual’s creditworthiness. This factor reassures a lender whether the applicant can repay the outstanding balance and remove the concern of defaulting.
Ideally, lending institutions give weightage to individuals maintaining a 750+ CIBIL score and a remarkable repayment history. Keeping a good credit score also provides a borrower with the power to negotiate regarding interest rate reduction and loan amount.
A potential borrower can implement certain ways like clearing outstanding debts, prepayments, updating credit reports, etc., to increase the credit score and home loan eligibility.
- Opt for a joint loan
There are certain times when the home loan application gets rejected due to eligibility criteria set by lenders. In such instances, an individual can make a credit application with a co-applicant. Applying with a spouse or family member possessing a high CIBIL score increases the loan eligibility. Since there is a guarantor, the lending institution feels at ease regarding the timely repayment.
Moreover, having a female co-applicant or property owner also helps in doubling the home loan tax benefits and reducing stamp duty charges.
- Provide multiple income sources
A smarter way to increase home loan eligibility is by showing multiple income sources. This affirms that the applicant has repayment potential and lower chances of defaulting.
In this regard, one can show surplus income gained through rental properties, investment, fixed deposit returns, freelance projects, etc. Keep required home loan documents ready to support this claim.
- Opt for a longer repayment tenor
A home loan gives the borrower’s the flexibility to choose a longer tenor. This is an efficient way to reduce the EMI outgo, making the repayment affordable. However, selecting this option increases the total interest payment.
As lower EMIs remove the strain on disposable income, an individual can maintain timely repayment. In this regard, one can use a home loan EMI calculator and tweak the available options to find the best deal.
- Reduce the debt-to-income ratio
DTI or debt to income ratio is important to lenders as it helps them understand a borrower’s capability to avail an additional loan without affecting the finances. Typically, a DTI going above 40% reduces an applicant’s home loan eligibility.
When facing such issues, one can bring down the ratio by prepaying existing loans. Again, strengthening income sources also helps in augmenting the housing loan eligibility. To ensure quick loan processing, always keep the documents required for home loan and tax challan handy as it would substantiate an individual’s claim of timely repayment.
These are the certain factors that can help improve an applicant’s home loan eligibility. Clearing these parameters would again help an individual find a suitable lending institution offering additional benefits.
For instance, one can find reputed HFCs extending pre-approved offers that make the loan application swift and hassle-free. Such offers are usually levied on credit forms like LAP, home loan, etc. You can check your pre-approved offer by providing your name and contact number.
Hence, keep track of the updated eligibility list published by the respective lending institution. And if the confusion prevails, use the home loan eligibility calculator and streamline the entire process.