Home Loan- Tips to Improve Your Eligibility

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home loan eligibility calculator

Property affordability has increased dramatically in the last two years, with home rates falling and loan interest rates reaching new lows. If you’re intending to buy a house, you’ll almost certainly want to borrow as much money as feasible. If you’re a first-time home buyer, you’ll need to do some research to determine your loan eligibility. 

Home loan eligibility is a significant criterion used by banks, non-banking finance companies (NBFCs), and housing finance companies (HFCs). This is used to determine the maximum loan amount a home loan applicant is eligible for and to assess her or his ability to repay the loan.

It’s critical for house loan applicants to learn how to improve their loan eligibility. Because that is the only way they can own their dream homes. Most of the banks and financial institutions provide home loan calculators to check their eligibility and EMI before applying for the loan.

Enhance your Credit Score

A healthy credit score improves your chances of getting a home loan. To do so, one must make sure that all loan payments are made on schedule. Your credit score will reflect your commitment in settling debt if you pay credit card dues and monthly installments (EMIs) on time. Any missed payment or default has a negative influence on your credit score. A low credit usage ratio (CUR) is also beneficial to your credit score.

Opt for Joint Home Loans

If you have numerous earning members in your family, applying for a house loan jointly boosts your chances of being approved for a larger loan. Applying for a home loan in India alongside your spouse and/or parents is the best option.

Co-borrowing improves home loan eligibility while also dividing repayment costs and providing tax benefits. A good-credit co-borrower boosts your EMI affordability, hence improving your house loan eligibility.

Opt for a Longer Tenure

A longer-term house loan can be used to boost home loan eligibility. Although a longer-term house loan decreases your EMI, it also raises your overall interest due. As a result, you must account for a greater borrowing cost while opting for a longer repayment duration.

Clear your debt obligation

The debt-to-income ratio is used by lending organizations to determine if a borrower is eligible for a house loan. As a result, it makes sense for an applicant to pay off all loan obligations in order to improve her or his home loan eligibility. They should improve their credit score by repaying past-due payments.

Open an Account with Your Preferred Lender

It’s a good idea to open an account with a lender you’ve chosen after researching various lenders and comparing the perks they offer. This should be done at least a year before applying for a home loan so that you have enough time to get to know the lender. A positive relationship with your lender will improve your chances of getting a house loan.

Declare your additional income source

Declaring any additional sources of income will help you qualify for a house loan. Because it shows that you have a better repayment capacity. When you declare your other sources of income, your home loan eligibility increases. Adding additional sources of income, such as rental income or a part-time business, can help you improve your financial situation. Therefore you should do so because it will help you secure a larger loan amount. Increased income will increase FOIR, emphasizing your greater repayment capacity.

Try to Put Down a Higher Down Payment

A home loan is typically funded by a financial institution or a lender for 75 percent to 90 percent of the property value. However, you may be responsible for the remaining sum. The lower the down payment, the larger the loan value and, as a result, the higher the interest payable. As a result, it is usually better to make a larger down payment in order to avoid paying a higher interest rate.

Avoid Job Change

If you are a salaried employee and want to apply for a home loan, you must work for at least two years in the same organization. Job changes on a regular basis have an impact on the amount of house loan eligibility. As a result, you should plan ahead of time so that you can demonstrate two years of continuous service in an organization.

Choose the Right Lender

You will have a greater chance of securing a loan from a housing finance firm if you are new to credit or self-employed. Most housing finance organizations have built in-house models. It is used to help them determine the repayment capacity and credit worthiness of applicants with a variety of income sources.

HFCs have carved themselves a niche in this market. They are specializing in low-cost house loans, and are sometimes a better bet. HFCs are also present in local markets where banks are not. Private or public sector banks will be available to salaried consumers with a good credit score. Always go with a lender with a proven track record and parentage.

You can quickly become eligible for a greater loan amount, extended duration, and better terms and conditions if you take the measures outlined above to enhance and raise your chances of qualifying for a house loan. You should begin by boosting your credit ratings and, if necessary, correcting any inaccuracies.

Creditworthiness is a crucial consideration when applying for a house loan. Simultaneously, continue to reduce your debt-to-income ratio and actively save for a down payment on your ideal home.

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