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16 JUNE, 2022
When you apply for a home loan, the lender assesses your home loan eligibility based on which they approve or reject your application. With an increased demand for housing in the Indian real estate market and interest rates that have been low for a while now, the demand for housing loans is also increasing. To make sure that your application gets approved, it’s important to be aware of how the lender will determine your housing loan eligibility. Here’s what you need to know.
1. Your credit score
Your credit score allows the lender to know your creditworthiness and credit history. This helps them determine your repayment capacity and whether you are a responsible borrower. This is an important factor when it comes to your home loan eligibility. A credit score of 750 or above is generally considered ideal when you apply for a home loan. A high credit score not only helps you get approved for the home loan but can also get you a lower interest rate. So, before you apply for a home loan, make sure to check what your credit score is. If it is low, try to improve it first.
2. Your total income
Another essential home loan eligibility factor is your income, employment status and history. Here, make sure you declare income from all your sources. The higher your income, the higher is your repayment capacity and that is what lenders are looking for. So, if you have any additional income sources other than your salary, make sure to include those.
3. Having a co-applicant
If you have a family member who is an earning member and has a good credit score, consider adding them as a co-applicant when you apply for home loan. This will enhance your home loan eligibility. Another advantage of doing this is that your home loan affordability will increase, which means you can borrow a higher amount.
4. Consider a longer tenure
When you opt for a short home loan tenure, your overall interest outgo reduces but your EMI amount increases. This might make it difficult for you to meet your EMI obligation regularly. But if you opt for a longer loan tenure it will reduce your EMI burden every month and hence you will be less likely to default. Hence, this will increase your home loan eligibility.
These are the four primary things based on which a lender will assess your home loan eligibility. Another thing that can help improve your eligibility is opening an account with your preferred lender. You can consider doing this if you have at least a year or more before you plan on applying for the home loan. This will give you some time to build a relationship with the lender. Finally, being aware of your home loan affordability along with your home loan eligibility will help. For this, you can use Kotak’s home loan affordability and home loan eligibility calculators online. These helpful tools will allow you to assess your own eligibility before you begin your quest for getting a home loan at an affordable rate.
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