Buying a home is a substantial investment for most people. But while owning a home brings a sense of accomplishment and stability, the ever-increasing property prices may prove challenging for you to afford one. In such a scenario, getting a home loan is the most feasible way to finance your property purchase.
However, several factors influence your eligibility for a loan, such as your income, ongoing liabilities, credit score, age, among others. But did you know you can pair with a co-borrower to enhance your overall eligibility? A co-borrower (also known as a co-applicant) can also help you get the loan on more competitive terms and significantly improve the chances of approval.
Let’s explore how a co-borrower can impact your home loan eligibility favourably.
Who can be a co-borrower?
An immediate family member or blood relative can be your home loan co-borrower. Typically, lenders give the first preference to your spouse with an income. Your parents, children, and siblings can also become co-applicants.
However, the age of your parents plays a vital role in determining eligibility if you add them as co-borrowers. But since every lender has its own set of guidelines, you should carefully check with them before taking the loan.
Additional Read: What are Joint Home Loans? Eligibility and Documents Required for It
How does a co-borrower improve your eligibility for a loan?
Adding a co-borrower in housing loanenhances your eligibility in several ways. They are:
- Lowers the DTI (Debt to Income) ratio: DTI is simply the ratio of your total EMI to your monthly income. A high DTI is one of the primary reasons for low loan eligibility. However, since lenders consider the income of both the co-borrowers when you apply for a joint loan, your eligibility naturally increases.
- Higher loan amount: Consider this – If you choose your working spouse as a co-applicant, the lender will pool your monthly incomes to assess loan eligibility. As a result, the loan limit offered to you will be much higher. This method will allow you to get speedy approval and get a higher loan amount as your EMI affordability will increase.
- Fetches competitive interest rate: Since a co-borrower supplements your repayment capability, you can get relatively better home loan interest rateson loan.
- Helps you get a loan with a low credit score: In case your credit score falls short of the lender’s requirements, your score combined with the credit score of your co-borrower can still save the day. This way, you can also boost the chances of your loan approval.
To sum up
Are you thinking of buying a house but having second thoughts due to lack of funds? Make use of home loans from Tata Capital and say goodbye to your worries! We offer a wide range of home financing options with attractive interest rates starting at just 6.90%.
With minimal documentation, you can avail of a loan amount of up to Rs. 5 crores. Moreover, you have the flexibility to choose a loan tenure of up to 30 years. Get in touch by calling us at 1860 267 6060 or write to us at: firstname.lastname@example.org.