A home loan refers to a loan taken to finance the purchase of a new house or property. There are numerous factors that the borrower must keep in mind while taking such loans. These include credit score, interest rates, amount of down payment, and the applicant’s age. So, let’s get you started on enhancing these factors to improve the housing loan eligibility criteria.
Factors that Improve Home Loan Eligibility
All individuals must first check the eligibility criteria before availing of home loans. These eligibility criteria are listed below.
-
Work on Building your Credit Score
A credit score truly reflects your financial status. All financial institutions keep track of your credit score before the approval of your loans. The certainty of repayment and EMIs is determined based on the credit report. Many organisations like Credit Rating Information Services of India Limited (CRISIL), Credit Analysis and Research (CARE) Limited and Credit Information Bureau (India) Limited allot credit scores. To appear sound and a reliable borrower, you must have a credit score of 750 or above. If your score is below 300, there are chances that the lender could reject your home loan. Having a solid credit score makes you creditworthy and a risk-free borrower in the eyes of the lender. You can also negotiate low-interest rates if you have high credit scores.
-
Relations with Lender
The chances of your home loan getting approved largely depends upon your relations with the lender or the financial institutions you are borrowing from. The older the relationships, the better. This is because lenders have an idea about the borrower’s credit history and financial past. Hence, they can determine whether the borrower will repay the loan amount with interest in due time. You can always go for institutions or fees you have previously borrowed from, as it helps ensure security and safety. One way you can get preference from your chosen lender is by opening an account with them. For this, you have to do proper planning. If you are availing of loans within a year, you should open a bank account with the desired lender well before applying for the loans.
-
Longer Repayment Tenures
The time taken for the borrower to repay your loan in installments is called repayment tenure. It is always recommended to opt for longer loan tenures, as it increases your home loan eligibility. The lender is assured that you have more time for the repayment of the loan. There is a higher possibility of repayment on time which in turn reduces the risk of the lender. Moreover, if there are longer repayment tenures and you keep paying your monthly installments timely, the borrower starts to gain a certain level of trust, and hence you can keep borrowing new loans whenever required.
-
Having Alternative Sources of Income
Adding a source of income gives a very significant benefit to the borrower. It helps them get higher loan amounts because of improved financial health. This additional source could be anything, a part-time business, or any income generated from rents.
However, you must always keep in mind to repay all your existing loans before you move forward to applying for a new home loan to the extent possible. It is crucial because by doing so, the lender can offer you higher loan amounts and lower interest rates. Existing loans make the lender believe that the borrower already has to repay the loan EMIs, and approving a new home loan can only lead to delayed or non-payment of EMIs. Adding to the borrower’s financial burden, there are also chances that the lender will reject the loan applications in such cases. Hence it is essential to pre-pay the existing loan.
-
Add a Family member as Co-Applicant
If you desire to secure higher loan amounts sanctioned by your respective lender or financial institution, always remember to add a close family member as a co-applicant. A co-applicant can be any member of your family, your working spouse, or your siblings. But, remember that your chosen co-applicant must have a high credit score and a stable income. Some lenders club incomes of the family members. Hence, by adding co-applicants, the repayment capacity rises, which helps in securing higher home loan amounts at low-interest rates. Borrowers must always keep in mind to check the current home loan interest rates before availing of such loans.
Conclusion
Owing your house is still a dream for many. However, there are a lot of financial burdens that come with purchasing your house. Look for home loans that provide you with financial assistance and turn your dream into reality. Furthermore, get access to attractive interest rates as low as 6.5% and flexible repayment tenures.