Points that can improve your eligibility for a home loan:
Knowing the elements that affect your home loan eligibility before applying is essential. These elements include:
- Applicant’s age
- Applicant’s income
- Credit score
- Location of Property
- The market value of the property
- Re-payments capacity, etc
1. Increase your credit score:
Here are some advices and suggestions that will help you improve your eligibility for a home loan by raising these factors.
A high credit score enables the applicant to obtain a loan with a lower interest rate. A high credit score serves as additional evidence of your responsible financial management. Even if you have never heard of the term “credit score” or are a beginner, learn to use your credit cards responsibly when applying for a home loan.
2. Choose longer re-payment tenure:
It cannot be easy to choose a shorter loan repayment term to repay the loan’s principal because shorter terms require higher EMI rates. Even if you have the resources to repay your loans quickly, a longer term is a wiser move. Then, once you have the money, you can start making prepayments and closing the loan.
3. Opt for joint home loans:
The likelihood of getting a home loan increases if you apply jointly with a co-applicant who earns a steady income. Additionally, having a co-applicant improves your chances of being approved for larger loan amounts. Additionally, many banks offer special women’s housing loans with relatively lower interest rates if a woman is a primary borrower or a co-applicant.
4. Pre-pay existing loans as much as possible:
The LTV ratio, or maximum finance charge allowed by RBI guidelines for home loan lenders, is typically between 75 and 90 percent of the property’s value. The borrower must contribute a down payment of up to 10–25% of the total loan amount. According to the advice, a higher down payment will result in a lower LTV ratio, which is crucial to improve home loan eligibility and to raise your chances of getting approved.
5. Decrement your FOI ratio:
The fixed obligation to income ratio (FOIR) measures how much of your income goes toward covering unavoidable costs. Due to a higher FOIR, loans are likely to be rejected. Therefore, lowering it to between 30 and 40 percent is necessary to raise your eligibility standards.
Conclusion: Everyone knows the final steps in applying for a home loan, but the specifics will vary depending on your eligibility. Following these recommendations will increase your chances of meeting the eligibility requirements for a home loan from any financial institution.