Are you looking forward to purchasing a new home? If yes, a home loan can help you finance the purchase. However, you can take a home loan only if you are eligible for it. Lenders have specific eligibility criteria that you need to fulfil to take a home loan. If you fail to do so, they can reject your application or charge you high interest rates. This can be very disheartening, especially when you are eagerly waiting to purchase your dream home.
But worry not. If you doubt that you might not be able to fulfil the eligibility criteria of the lender, you can use the following tips to improve your home loan eligibility.
Maintain a good credit score – Your CIBIL score signifies your capacity to repay the loan. It is calculated basis your past loan repayment record, including credit card dues. Check your credit score and take steps to improve it. A high credit score shows high repayment capacity. It will also help you get a lower home loan interest rate. You can pay off all your current debts and keep no outstanding balances. Do not take multiple loans and pay credit card dues and loan EMIs on time. Ensure to maintain a credit score that is above 750 to enhance your home loan eligibility.
Take a joint home loan – This is one of the easiest methods to enhance home loan eligibility. If you are falling short on the eligibility criteria, you can add a co-applicant to your home loan. You can take a joint home loan with your spouse or parents. Your co-applicant would share the repayment responsibility and the two of you can avail tax benefits too.
Opt for a longer tenure
Opt for a longer tenure while applying for a home loan to improve eligibility. With a longer tenure, you get more time to repay your loan. This spreads your EMI payout, increases the chances of timely repayment of the loan and also reduces the risk of default for the lender.
Choose a known lender
It would be better to take a loan from a known lender. You can take a loan from the bank you are associated with. Else, if you have chosen a specific lender and plan to apply for a loan within a year or so, you can initiate a relationship with them by opening a bank account way before you apply for the loan. The lender may give you preference in case you wish to opt for a home loan from them sometime later.
Reveal all sources of income
Your income is an important eligibility criterion. If you have displayed a low income, the lender could doubt your repayment capacity and hence reject your application. Instead, reveal all your income, including any second source of income.
Ask for a step-up loan
In a step-up loan, the EMI of the loan is lower in the initial years, but the lender increases your EMI in the later years with the increase in your income and financial capacity. You can fulfill the eligibility even with a low income by taking a step up home loan. You can repay through small EMIs initially and then pay off the remaining loan when your financial condition improves. A step-up loan might have a higher interest rate and the lender could do a stringent check on your profession and success ladder.
Taking a home loan is a big financial decision. You may or may not get the loan if you do not fulfil the eligibility criteria. However, you must not panic or lose hope, and instead, follow the above given steps easy steps to improve your home loan eligibility.