To determine if an applicant is eligible for a loan, banks conduct a thorough process. Banks and lenders also determine the maximum amount allowed and the interest rate based on applicant’s financial information, including income, employment type, credit score, and so forth. These tips will help you increase your eligibility for a loan to buy a house.
6 Best Ways to Increase Home Loan Eligibility Quickly
- You can choose a longer term
- Register an account with your preferred lender
- Declare additional income sources
- Credit score of at least 750
- Add a coapplicant
- Repay your debts religiously
1. You can choose a longer term
A longer repayment term can improve your eligibility for a home loan. The EMI amount will be lower, which means you are more likely make timely payments. It will make you appear less risky to the lender and increase your eligibility for the loan. On the other hand, you may pay more interest during the loan term.
2. Open an account with your preferred lender
It is a smart idea to open an accounts with them after you have compared the benefits offered by different lenders. It is best to do this at least one calendar year before applying. You will have sufficient time to develop a relationship and trust with the lender. Good relationships with the lender will improve your eligibility for a mortgage.
3. Declare your additional income sources
If you have additional income, it can increase your eligibility for a home mortgage. It also indicates your higher repayment capability.
4. Maintain a credit score above 750
Higher credit scores (preferably 800 or more) can increase your eligibility for a home loan. This is because a high credit score means that you have a high repayment capability. A high credit score will also help you get a lower rate of interest from your lender. To avoid loan rejections, you should regularly check your credit score so that you can make corrective steps.
5. Add a co-applicant
An earning member of your family with a credit score can be added as a coapplicant to increase your eligibility for a home mortgage. You will be able to borrow more because you will have a lower EMI. Lenders may consider the income of relatives when evaluating your eligibility for a mortgage.
6. Repay your debts religiously
Being honest with your debts can build credit, which will in turn increase your eligibility for a home loan. Also, you should have savings to help increase your home loan eligibility.
Additional Tips on Factors Affecting Home Loan Eligibility
- Income – This is the most important factor banks take into consideration when determining eligibility for a loan. Because your ability to repay the loan will be higher, your eligibility for a home mortgage loan is greater if you have a higher income. If your earnings are high, your maximum loan amount will be increased.
- Age –Age is another factor that can significantly impact your eligibility for a home loan and help the lender determine the loan term. Your eligibility for a loan is more if you’re younger than your actual age.
- Credit Score –Lenders will examine your credit score in order to determine eligibility for a home loan. A minimum score of 750 is recommended.
- Debt Obligation – If you have a high debt obligation, your eligibility for a loan to buy a home may be reduced. This is because lenders may assume that you are not able pay the EMIs.
- Your occupation will determine your eligibility for a loan. Your eligibility for a home loan will be greater if you are a salaried person. This is because you have a steady source of income. Home loans are available to professionals such as architects, doctors, and businessmen.