Applying for a Home Loan? Follow These Steps to Improve Your Eligibility

Individuals planning to own a residence often rely on home loans. However, such credits are not available to all.

Home loan eligibility criteria are the conditions that a potential borrower has to fulfil to qualify for this loan. This substantiates reliability and repayment capability in the lender’s eye. Failing to clear these parameters can lead to rejection of loan application.

However, applicants can improve home loan eligibility by following some simple steps.

Steps to improve home loan eligibility

• Clearing the outstanding dues

Lenders assess borrowers through the debt to income ratio. This is ideally a percentage of an applicant’s monthly debt liabilities as opposed to his/her income. Borrowers with a significant debt to income ratio may face loan rejection. Therefore, one should repay any existing debt before availing an additional liability, such as home loans.

• Boost credit score

A lender always gives preference to borrowers with a 750+ CIBIL score and remarkable credit history. They also get the privilege to negotiate for a lower interest rate with the lender. Pay your existing loan EMIs on time to improve this score.

• Increased down payment

An applicant can increase the down payment of an existing home loan to improve eligibility. This factor aids in two ways. First, the increased down payment helps in reducing the principal amount. Moreover, it creates an impression that the borrower is reliable in terms of monthly repayment.

• Opting a loan with co-applicant

Availing a home loan with a co-applicant also boosts the eligibility. It substantiates reliability in the lender’s eyes that if the primary applicant cannot clear the due, the guarantor will take responsibility. Again if a borrower has a poor credit score, a co-applicant with excellent credit history can increase loan approval chances.

• Loan amount

This factor plays a significant role in loan eligibility. Lenders ideally check the credit score, existing loan tenure, debt to income ration, before loan disbursal. However, an applicant needing emergency fund can opt for a lower amount to increase loan disbursal chances. They can also use the home loan eligibility calculator to confirm their chances of credit approval.

Following these habits should ensure faster and simplified housing loan approvals.