Currently, the substantial untapped market for cost-effective houses is being fuelled by the evolving housing finance sector. Prospective home buyers simply have to check home loan eligibility criteria, meet the parameters and apply for financing online.
A home loan is by far the most feasible financial product to purchase or construct a residential property, available at a relatively low interest rate. As a result, individuals planning to buy their dream house can work towards increasing their eligibility first to enjoy instant approval.
Tips to improve your eligibility for a home loan
Housing loan eligibility is crucial for lenders to filter a creditworthy borrower and determine factors like maximum credit amount, interest rates, terms and conditions, etc. Below are some tips to increase eligibility strategically:
1. Improving the CIBIL score
CIBIL score reflects an individual’s financial behaviour and probability of making timely repayments when applying for a home loan. Being a key parameter, it must be above 750 on a scale of 300 to 900. Borrowers can increase their score in the following ways:
- Paying bills on time
- Avoiding payment defaults
- Closing smaller amounts to borrow
- Having a good credit mix
- Keeping credit utilisation ratio below 50%
- Checking for errors in the credit report and ensuring it is clean
- Avoiding multiple credit applications at a time
2. Closing the current loans
Individuals already paying EMIs for existing loans should consider closing those first before applying for new credit. The reason is that lenders consider the debt-to-income ratio to evaluate a borrower’s eligibility. This will improve their housing loan eligibility and bring approval quickly. This ratio signifies the total monthly income and the percentage used in paying those EMIs and meeting other liabilities. Therefore, individuals should pay off existing debts as much as possible before taking up a new one.
3. Selecting a longer tenor
A longer repayment tenor makes EMIs smaller while the total interest outflow increases. However, borrowers with low income often qualify for credit with this option. Hence, borrowers should try taking a longer tenor if they can afford it. Also, they can evaluate the best combination using a home loan EMI calculator online.
4. Opting for joint loans
Another effective way to increase the chances of approval is by getting a joint home loan. Besides qualifying easily, this option brings borrowers a lot of additional benefits. First, however, they should make sure to check home loan eligibility of both applicants as the eligibility of both applicants is considered by the lender. Here’s a complete guide to joint home loans for further information.
5. Mentioning other income sources
Whether an individual’s monthly income is higher or lower than the minimum requirement for this form of credit, they can always mention other sources of income. Fixed deposits, rentals, other businesses, mutual fund dividends, etc., are a few to mention. These assure lenders of their strong repayment capability. This way, they become eligible for a higher limit to purchase the best property available for their family.
As borrowers fulfil these criteria to increase approval chances, there’s another way to check home loan eligibility quickly.
Using online eligibility calculators
Leading housing finance companies offer online Home Loan Eligibility Calculators, which help to secure a satisfactory amount. So, even before applying, borrowers can know the maximum credit amount they are qualified to avail.
The home loan eligibility calculator will display the highest amount individuals are qualified to avail. They can then proceed to apply through an easy application form online.
Reputed housing finance companies also bring exclusive pre-approved offers to make the application process hassle-free and quicker. Such schemes are available on a host of financial products like home loans, loans against property, etc. Individuals can check their pre-approved offers by providing their name and phone number only.
Alongside the above-mentioned tips, there are a few other parameters set by financial companies which every borrower has to meet. So, individuals must ensure to check the home loan eligibility criteria of their preferred HFC and qualify for an instant approval easily.