The RBI Monetary Policy Committee has kept the repo rate unchanged at 4%. This serves as an excellent opportunity for those buyers who wish to fund their requirements. However, accessing this credit requires fulfilling specific home loan eligibility criteria set by lenders.
Besides, applicants can enjoy certain benefits by integrating financial strategies to increase their creditworthiness and eligibility.
How to increase your home loan eligibility?
Here are some tips to help potential borrowers enhance their eligibility for successful borrowing:
Improve CIBIL score
One may have questions like, ‘What is CIBIL score, and how can improving the score help secure the loan’. The CIBIL score for a home loan is a determinant of an applicant’s creditworthiness.
This factor reassures the lender that the applicant can repay the outstanding amount without defaulting. Besides, lenders prefer applicants with a CIBIL score of 750 or above and perceive them as more creditworthy than others.
Furthermore, those who have a higher CIBIL score have a chance at securing a higher loan value at low-interest rates. A potential borrower can practice paying outstanding debts on time, prepayments, updating credit history to increase their home loan eligibility.
Apply with a co-applicant
Many times, a home loan application is rejected due to the stringent eligibility parameters set by the lenders. In such a situation, it is best to apply with a co-applicant who can either be a spouse, parent, child or sibling. However, the co-applicant should have strong creditworthiness.
This is another excellent method that can increase one’s home loan eligibility. Moreover, one of the major benefits of taking a joint home loan is receiving a higher loan amount. As there is a guarantor, the lending institutions feel at ease as there will be no default in payment.
Besides, there is better fund management as the EMI and interest burden are equally divided when applying with a co-applicant. They are also eligible to claim tax benefits under Section 80C of ITA.
Opt for a longer repayment tenor
Applicants have the flexibility of opting for a repayment tenor. This makes the monthly instalments payable affordable. However, choosing a longer home loan tenor increases the total interest paid.
Although choosing a shorter tenor is one of the easy ways of paying a loan faster, opting for a longer tenor reflects that one can afford the monthly instalments for a longer duration.
Show additional income
Applicants who have an additional source of income like earnings from rent, business, investments must make a point to declare them while apply for home loan. The lender perceives that the applicant has repayment capacity and has fewer chances of defaulting. These papers proving additional income sources also displays that a borrower has financial backup.
Repay your debts meticulously
Individuals with more than one existing credit often fail to qualify for a loan. Lenders perceive these applications as prone to default. On the other hand, applicants who practise zero defaults and timely payments are considered eligible. Hence, it is vital to repay one’s debts meticulously and is one of the many ways of improving home loan eligibility.
Make a higher down payment
Most financial institutions tend to finance up to 75-90% of the property’s cost. The rest of the expenses have to be borne by the applicant. Hence, it is recommended that borrowers make a higher down payment, if possible. They can check the amount they can prepay using the home loan prepayment calculator.
The above tips can help enhance one’s home loan eligibility. Meeting these parameters would allow an individual to receive additional benefits from the lending institution.
For instance, one can find reputed financers extending pre-approved offers to customers to streamline the borrowing process in a hassle-free manner. Borrowers can avail such offers on several financial products that include home loans and loans against property. Check your pre-approved offer now in a few steps by entering your name and contact details.
However, the eligibility parameters vary from lender to lender. Thus, it is advisable to go through the preferred website of the lender before applying for a home loan.