Want to apply for housing finance but not sure if you’ll be sanctioned the desired amount? Well, you’re not alone! Several home loan applicants face similar concerns. However, you can take steps today to ensure that you have high eligibility for housing finance.
Let us have a look.
#1 Get a joint loan
One sure-fire way to ace home loan eligibility requirements is to apply with a co-applicant. You can co-borrow the loan with your spouse, sibling, or any other immediate family member. Getting a co-applicant on-board means you pool your incomes together, which improves your EMI affordability. This increases the total principal amount that you can borrow.
#2 Maintain a stellar credit score
One major factor lenders consider to determine your eligibility for home finance is the CIBIL or credit score. A high credit score, preferably 750 or above, depicts a positive credit history with timely repayments in the past. A good score can help you bag competitive home loan interest rates.
Remember to run frequent checks on your credit report to see if it has any discrepancies. Pay your debts religiously and clear your credit card dues timely to maintain a healthy credit score.
#3 Pay off existing loans
When evaluating your financial fitness, lenders also look at your ability to pay off additional debt. They consider your current debt obligations by checking your debt-to-income (DTI) ratio. The DTI ratio is calculated by dividing your gross monthly income by your net monthly debt payments, including existing loans, credit card bills, etc.
A low DTI, preferably 40% or below, shows a good balance between your existing debt and income. If you have a high DTI, reduce your overall debt burden by clearing outstanding loan payments, etc.
Additional Read: Is It Possible to Increase Your Home Loan Eligibility?
#4 Choose a longer tenure
Another way of increasing home loan eligibility is to choose a longer tenure. A longer tenure naturally means a lower EMI amount; therefore, you will be more likely to make timely payments. However, a longer loan term also means higher interest outgo. So, use a home loan EMI calculator and figure out an ideal EMI and interest amount before applying for the loan.
#5 Highlight additional income sources
The equation is simple – the greater the income, the greater your repayment capacity; therefore, the higher your loan approval chances. If you have any additional income sources, be sure to highlight them to your lender.
Other factors that determine your loan eligibility
Lenders also consider your age, occupation, monthly income, work experience, etc., to gauge your eligibility. The eligibility conditions can vary for salaried individuals, self-employed professionals, and NRIs.
Additional Read: Check out your Home Loan Eligibility Based on Salary
To purchase your dream home, you must start in the right direction. Keep your credit score high, evaluate your EMI affordability using a home loan EMI calculator, and opt for a suitable loan tenure. And remember to clear your existing debts.
Looking for a reliable lender with easy home loan eligibility terms? Opt for Tata Capital’s home loan. Get quick and hassle-free loans with attractive home loan interest rates, extended tenures, and flexible repayment options. Check our eligibility criteria before applying today!