Tips For Boosting Home Loan Eligibility
Jun 14, 2023Home Ally

Tips For Boosting Home Loan Eligibility

by Godrej Properties Limited

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Boosting Home Loan Eligibility

Boosting your home loan eligibility can increase your chances of securing a more significant loan amount or better loan terms when applying for a mortgage. In addition, by enhancing your eligibility, you demonstrate to lenders that you are a low-risk borrower who can comfortably handle the financial responsibilities of a home loan. You can take several steps to improve your eligibility and maximise your borrowing potential.

12 Best Ways to Increase Home Loan Eligibility Quickly

1. Improve Your Credit Score

Your credit score plays a crucial role in LIC home loan eligibility. Pay your bills on time, reduce outstanding debt, and avoid applying for new credit before applying for a home loan. Regularly review your credit report for errors and take steps to rectify them if necessary.

2. Increase Your Income And Stability

Lenders consider your income when assessing your SBI home loan eligibility. Try to increase your revenue by taking on additional work or improving your skills. Also, having a stable employment history can enhance your eligibility. Avoid changing jobs frequently before applying for a home loan.

3. Lower Your Existing Debt

Lenders assess your debt-to-income ratio, which compares your monthly debt payments to your income. Reducing your existing debt, such as credit card balances or personal loans, can improve your ICICI home loan eligibility. Consider paying off high-interest debts or consolidating them to lower your monthly obligations.

4. Save For A Larger Down Payment

A larger down payment reduces the loan amount you need, making you a less risky borrower. Aim to save a substantial down payment, as it demonstrates financial discipline and improves your eligibility. A higher down payment may also result in lower interest rates or waived mortgage insurance.

5. Maintain A Stable Financial Profile

Lenders prefer borrowers who exhibit financial stability. Therefore, avoid making significant purchases or taking on new debts before applying for a home loan. Also, maintain a healthy bank balance and savings account.

6. Research And Compare Lenders

Different lenders have varying eligibility criteria and loan terms. Take the time to research and compare lenders to find those who offer favourable terms and are more likely to approve your loan application. 

7. Choose the Right Lender

Choosing the right loan provider is vital when taking a home loan, and options include public or private sector banks or Housing Finance Companies (HFCs). Opt for a provider whose eligibility criteria align comfortably with your profile. If, after applying, the lender finds you don't meet their criteria, your loan application is likely to be rejected.

8. Declare Additional Income Sources

If you declare additional income sources, such as rental income or a side business, it can enhance your eligibility by showcasing a higher repayment capacity. 

9. Choose Longer Tenure

Extending the repayment tenure can boost your home loan eligibility as it lowers the EMI amount, making timely payments more likely. However, a longer tenure may result in higher interest payments over the loan period.

10. Choose Joint Home Loans

Opting for a joint housing loan with multiple earners in the family significantly improves your eligibility. It shares the repayment burden, providing tax benefits. 

11. Maintain FOIR Below 40%

The Fixed Obligation to Income Ratio (FOIR), representing the ratio of debts to income, is a crucial parameter for determining home loan eligibility. Most financial institutions assume that around 50% of your income is necessary for living expenses. 

12. Open an Account With the Lender

Once you've explored different lenders and decided on one, consider opening an account with them. Open it for at least a year before applying for a home loan.

Final Word

Remember, boosting your eligibility doesn’t guarantee loan approval, but it can improve your chances of securing a home loan with favourable terms. It’s always advisable to consult with a mortgage professional or financial advisor who can provide personalised guidance based on your specific financial situation.

 

Frequently Asked Questions

1. What credit score is needed to boost Home Loan Eligibility?

Ans: While specific requirements vary among lenders, a higher credit score improves eligibility. Aim for a score above 700, but note that higher scores may offer more favourable loan terms.

2. Does my employment history affect Home Loan Eligibility?

Ans: Lenders generally prefer applicants with a stable employment history, which signifies a steady income source. However, specific requirements may vary among lenders, and some may consider factors such as industry expertise, education, or self-employment.

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