Everyone dream for their own home, and to attain that goal people apply for home loan. The process of loan is full of hurdles and barriers and the first one is meeting the eligibility criteria. Yes, various banks have their own eligibility criteria for fulfilling the requirement of Home Loan. It includes age, credit score, the location of property, income, repayment capacity etc. So, now the question is how to enhance your eligibility for a Home loan? In this blog, we will discuss tips to assist in enhancing loan eligibility.
Have you ever thought what are the reasons behind the rejection of home loan application? Low credit score, higher debt to income ratio, insufficient income etc are the main reason behind the rejection. To avoid such situation, borrowers need to enhance loan eligibility. Going for the joint home loan is the best option for such situations as it will help to boost loan approval if co-applicant has stable income and strong credit score. Also costing involve in taking a Home loan is high so the joint plan is good. Above all, if co-applicant will fulfill all these criteria then he/she may push for a higher loan amount. Also, if a woman is a first & co-applicant then she usually gets lower interest rates by a majority of lenders.
Consider loan repayment a hectic job, borrower often tends to opt shorter tenure in order to quickly finish it. However, we ignore the fact that shorter tenure implies higher EMI’s which may impact the loan repayment capacity of the borrower. This also hampers the loan eligibility of borrower. On a contradictory, it is suggested to go for longer loan tenure, higher the loan tenure, lower your EMI’s would be.
To evaluate loan, lenders consider the credit history of the borrower. It plays the role of a key parameter for approving the loan application. A good credit score enhances the chances of loan approval as it defines the discipline handle of finances. Beyond all this, a good credit score enables the consumer to avail low-interest rates.
Those who are in the initial stage of building credit score or with low credit score need to adopt a discipline usage of credit card. In case, you are opting join home loan then, a credit score of co-applicant will also matter.
As per Reserve Bank of India (RBI), as per LTV ration home loan lenders can finance up to 75 to 90% of the property’s value. In that case, borrowers have to contribute only 10 to 25% as down payment. However, instead of minimum down payment, it’s wiser and smarter to provide a higher contribution from your own. This means the higher you pay your down payment, the lower will be your LTV ration, this will enhance your loan eligibility and enhance the chance of loan approval. You can get higher down payment corpus by investing in mutual funds, SIP etc.
It’s better to understand that instead of paying rent for years of duration better to start investing. Once you invest and get good in return amount from it fulfill your home dream through it. Invest will also help you in developing a good credit score. To apply for home loan, but before that learn and your work eligibility.