Do you want to be eligible for home loan? Follow these guide, know from tenure to credit score
Home loans are given depending upon your age, your salary status, your capability of repayment and background checks of previous loans
Everyone has a dream to one day buy their own desired house. However, not always everyone has the required funds available in their hands, which is why many are left with an option to opt for home loans. Having a home loan is better because it comes with long tenures exceeding even 10 years. This allows you to make a proper plan for your repayment of debt in an appropriate manner. A borrower can always choose to close their loan before the tenure ends, however, this varies bank to bank. Some banks have a lock-in period, which means you cannot end your loan even if you have the lump sum amount to fulfill it.
Home loans are given depending upon your age, your salary status, your capability of repayment and background checks of previous loans. If your credit score is very good then getting an home loan is very easy as your bank is assured that you are trustworthy and capable enough to repay your debt.
Gaurav Gupta, Co-founder and CEO, MyLoanCare.in says, "It is extremely crucial because, in the end, no one wants to see their dream getting shattered because of a poor credit score.
Buying a home is a dream decision for many but to get it financed, one needs to look into one's credit profile and eligibility for a home loan."
While banks and financial institutions look into aspects like a good credit score of 700 and above, loan repayment history, the number of credit cards taken, track record etc, there are a few other ways in which you can increase your eligibility for a home loan as well, as per Gupta. Let's find out.
Pay off any pre-existing loan amounts:
It all adds up to your home loan eligibility if before taking a home loan, you clear you existing loans or credit card bills. If you have any outstanding loans, especially on your credit card, clear them. This will enhance your CIBIL score.
In case there are any discrepancies or errors in the score, approach the bureau immediately as it takes 35-40 days to get the information updated on the score card. A poor credit score can be a spoiler when applying for a home loan.
Consider a longer tenure:
Higher EMIs usually increase your debt liability and bring down the eligibility for any potential loan application. Hence, one must opt for a home loan with a longer tenure to improve their eligibility for the same as it decreases the burden of the EMIs and improves the ability to repay. Moreover, in this case, the principal and the interest rate remains the same while only the net interest outgo surges.
For instance, if you plan to take a home loan for 15 years and realise at the time of the evaluation that the EMIs are higher than your expectation, you can request for a longer tenure period to reduce the monthly payment burden. You may be able to get a loan with a lower EMI much more easily.
Include your additional income for the boost:
While lenders usually evaluate the loan eligibility basis the fixed components of your salary, presenting your additional sources of income in terms of incentives, investments or rental income too can improve your home loan eligibility. However, lenders would need supporting documents as proof of this additional income.
Apply with parents or spouse to share the burden:
The best way to improve and increase your loan eligibility is to consider applying for a loan together with a parent or a spouse. This will include their income in the application too. However, you may need to check the application guidelines on the terms and conditions before finalising the co-applicants for the loan. Many lenders do not prefer to give the loan to siblings as co-applicants. Meanwhile, only those who are in their late 20s and early 30s are preferred for a home loan with a long tenure. The advantages of having an eligible co-applicant can be significant.
For instance, if your monthly income is INR 1.5 lakh and you are applying for a home loan worth INR 60 lakh, your monthly instalments might break your bank. By including your spouse as a co-applicant who is earning a monthly income of INR 70,000, the loan eligibility and interest rates might improve basis the integrated monthly income, which would now be INR 2.2 lakh. A better eligibility score may mean a better offer from the bank and therefore reduced monthly burden on you!
Maintain a healthy credit score:
A credit score not only determines your eligibility for a loan but also your eligibility to get a low interest rate. A loan taken at low interest rates means low EMI which in turn increases your home loan eligibility. Maintaining a healthy credit score requires consistent discipline in taking new loans and repaying them in a timely manner while ensuring that there is no negative entry in your credit report, that can pull down your credit score.