Introduction
If you want to embark on the journey towards homeownership, having an “AMBITION” is just not enough. Unquestionably, it’s best to work towards fulfilling those ambitions by having a “STRATEGIC PLAN”. To get to this stage, improving your eligibility is very important.
How can you enhance your eligibility effortlessly with 6 tips?
Improving your home loan eligibility increases your chances of getting the loan approved. You have to go through a painstaking process to finally get the home loan you were patiently waiting for.
The number of document requirements is extensive but also cannot be ignored. Now, imagine that after submitting all the documents asked by the bank, they decide not to grant you a home loan. Why? Because you couldn’t meet their eligibility criteria.
So, join us as we explore the realm of securing home loans by upscaling the eligibility game and paving the way to turn your ambitions into reality.
1. Increase your Credit Score or CIBIL Score.
Always keep a high CIBIL Score because it will increase your prospects of receiving a home loan. The score must be 750 or higher, the banks will reduce the rate of interest applied on the loan. Additionally, having savings and investments increases your eligibility.
Ensure you clear all your outstanding debts and pay the EMI on time because any default or delay will hypercritically affect your credit score. On the contrary, paying your debts on time will build a good credit score while increasing your eligibility for a home loan.
2. It’s always better to add a co-borrower:
You can opt for a joint home loan by including your spouse or family member while taking out a loan. Typically, the combined monthly income of both is considered and then the bank decides whether you are eligible.
Adding a co-applicant improves your scope of getting a loan, it’s a plus point if they have a strong credit score as it increases your eligibility to qualify for a home loan. This is also beneficial to you as your EMI affordability increases, and you can receive tax advantages.
3. Choose an extended tenure:
You need to increase your loan tenure if you want a higher loan amount. Although opting for a longer tenure will optimize your home loan eligibility, settling for an extended tenure will reduce your EMI amount while increasing your total interest payable. This will also make it easier to repay the loan on time as there will be fewer chances to default.
4. Pick a lender you prefer to work with:
Lenders can be tricky sometimes, although most lenders operate fairly and responsibly, there are a few out of the lot that may foster situations with confusing terms, hidden fees, and aggressive marketing tactics. Therefore, it’s best to thoroughly research the one you choose.
It’s important to ask questions and know your rights. Start your planning 1 year prior by mapping out your moves, and in the process, you will get enough time to ensure a long-standing relationship with your lender.
5. Any additional sources can easily enhance your application:
Additional funds are those that are apart from your monthly income; this will enhance your loan eligibility. Sources through fixed deposits, mutual funds, rental corpus, etc., are considered additional sources. This elevates your repayment capacity with the lender.
6. Get a higher down payment:
Another way to increase your eligibility is to save up for a larger down payment when purchasing the house, as the loan amount and the risk of default decreases. A higher down payment lowers the EMI cost and the interest rate.
What makes it different for a salaried or a self-employed person?
While both can easily avail of the home loan, there are some critical points that differentiate the two. Let’s find out what they are.
What ideally counts as home loan eligibility for salaried persons?
Frequent job changes can hamper your eligibility criteria if you're a salaried individual. If you’re applying for a home loan, make sure that you are with the same company for at least 2 years. You must be between the ages of 21 to 60 years.
A steady salaried individual can get a home loan amount up to 6 times the annual gross salary. It’s important to be fully informed of the home loan eligibility for a salaried person to avail of the loan without hassle.
What criteria can warrant a home loan eligibility for a self-employed individual?
Home loan eligibility for a self-employed individual involves evaluating their financial capacity to repay the loan. Unlike salaried individuals, self-employed individuals' income might be variable, making the assessment more intricate.
For self-employed people, lenders usually offer 2-3 times their annual net income or 80% of the property value, whichever is the lowest. This often varies from lender to lender. A self-employed or professional individual's age limit is 25-70 years to avail of a home loan.
Conclusion:
Previously, we discussed having a “STRATEGIC PLAN” before applying for a home loan while also discussing the crucial points that will enhance your eligibility. These points are strategically listed to make getting a home loan a lot easier for you.
If you follow these 6 tips, embarking on this homeownership journey will not be too far for you. We know that a home loan is one of the toughest financial decisions one takes, but with thorough research and a well-prepared plan, you will be able to successfully acquire a home loan.
Prioritizing your financial discipline, thorough documentation, and seeking professional guidance will boost your chances of loan approval and set you on a path towards realizing your homeownership goals. Happy house hunting!