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16 FEBRUARY, 2022
The first thing you must consider while applying for a home loan is its eligibility. Lenders are very critical of the eligibility while processing the application. If you are unable to fulfill them, they can deny lending you a loan. Therefore, you must check your eligibility from the lender’s website before applying. With the various calculators available online, you can calculate your eligibility and find out the amount of home loan you can avail.
Here are a few tips to help you improve your eligibility.
Tips to enhance your home loan eligibility
Your credit score can significantly affect your eligibility. If you have a good credit score, you are more likely to get home loan offers at attractive interest rates. Before you apply for a home loan, check your credit score. Ensure that it is above 750, as a lesser score can deplete your eligibility. To maintain/increase your credit score, pay all your dues and credit card bills on time. You must also check your credit report to ensure that there are no discrepancies in it. If there are any, it would be best to request the bureau to rectify them.
If your eligibility is low due to low income, adding a co-applicant can be a great help. You can avail a joint home loan with your working spouse or parents. The lenders add the income of your co-applicant while processing the application, improving your eligibility.
If you earn some passive income like rent or interest on investments, add them to your total income while filling out the application form. Declaring additional income will help improve your Fixed obligation to income ratio (FOIR), thus enhancing your eligibility.
For a home loan, it is crucial to have a steady job profile. If you are planning to avail a home loan, avoid changing jobs or making any significant professional change. Lenders prefer borrowers employed in an organization for at least two years continuously. In addition, your eligibility is higher when you are working in a government company or a reputed private organization.
Having too many debts can have adverse effects on your eligibility. You must have a low debt-to-income ratio to be eligible for a home loan. Before you apply for a home loan, clear all your debts. You can avail a debt consolidation loan to repay them at one interest rate.
A longer tenure lowers the EMI and reduces the chances of default. This reduces the risk for the lender and thus, strengthens your home loan eligibility. Therefore, opt for a longer tenure. However, also know that longer tenures can increase your interest outgo.
Apart from these tips, paying a higher down payment can also help you boost your eligibility. High eligibility can help you get a high loan amount, extended tenure, and competitive interest rates. Therefore, you must check your eligibility with a home loan eligibility calculator before applying. Wait no more. So, apply for home loan and fulfill your dream today.
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