It is a well-known fact that home affordability has witnessed a significant rise in recent years with declining home rates and interest rates on loans. However, when one plans to buy their dream residence, they are not willing to go all in, so this is where a home loan comes in. Taking a home loan is one of the most important financial decisions in life, and to get it, housing loan eligibility is a mandatory step.
What is home loan eligibility?
A set of criteria basis where a financial institution assesses whether the customer is creditworthy or not. This is basically to check whether they can avail and repay a particular loan amount. The two prime factors of this type of loan eligibility are income and repayment capacity of the borrower. However, other factors include age, financial position, credit history, score, etc.
What are the top smart tips to increase your home eligibility?
Choose a long tenure
Whenever you increase your loan tenure, it increases your housing loan eligibility as there is a tendency that the lender will get to know that you have a lot more time to repay the loan amount. Therefore, a long tenure gives you additional to repay it, ultimately resulting in timely payment and reducing the risk of the lender.
Strengthen your CIBIL or Credit Score
A great credit score always boosts home loan eligibility. However, in order to achieve it, you must make sure that all loan repayments are made on time. Financial institutions usually check your credit score to determine your creditworthiness, and any delay in payments impacts your credit score negatively.
(Tip: There is no minimum score for a home loan, but 750 and above is generally considered a good one for approval. A good score also leads to low home loan interests.)
Pre-pay your existing loan
If you have any loan under your name, try paying it before applying for a home loan. Due to the non-repayment of the existing loan, the respective lender may reduce your loan amount or offer it at a high-interest rate. The lender may also think that the borrower is already burdened with loan EMIs and, by sanctioning additional loans, may end up with delayed or even non-payment of EMIs. So, in this case, the loan can even be denied.
Declare your additional income
The housing loan eligibility increases when you declare any additional sources of income as it indicates that you have a high repayment capacity. Whether rental income or part-time business, additional income gives an advantage of securing a higher loan amount.
Go for a higher down payment
A financial institution finances a loan to approximately 75% to 90% of the property value. If you lower the down payment, the loan value increases and results in higher payable interest. So, therefore, it is always advisable to go for a higher down payment to avoid a higher interest payout.
Open an account with your preferred lender (One year prior)
It is always a good idea to open an account first with your preferred lender. This means after exploring various lenders and comparing their benefits, when you finally choose one, open an account with them for at least one year before applying for a home loan and build a relationship with them. This helps in increasing your housing loan eligibility for your dream abode.
From my personal experience, it’s best to remain with a single company for all financial tasks. For example, I have been using the Bajaj Finserv application for every task. From electricity bills to mobile recharge to even my income tax, it has become my go-to app.
Also, around six months ago, we were planning to purchase a flat here in Gurugram. But, instead of going places for home loans, I discovered that it is readily available on the same application.
This is not promotional content, I have used other applications too, but I found this one really convenient. So if you are planning for a home loan, I’d advise you to choose Bajaj Finserv to grab the best deal.