Six Best Ways to Improve Home Loan Eligibility!

Home loan interest rates have been lowered significantly by banks over the past couple of years to make buying a property an affordable exercise. However, there are a few boxes to check before applying for a home loan. If you are applying for a home loan, make sure the quality of your home loan application meets the lender’s expectations for eligibility.

Banks run a comprehensive process to determine an applicant’s eligibility for a home loan. The maximum eligible amount and interest rates are also determined by the bank based on the applicant’s profile, which includes income, job type, credit rating, etc. Eligibility for a home loan can be increased by following the tips below:

1. Add a co-applicant

You can improve home loan eligibility by adding a time-saving family member with good credit as a co-applicant. It will also increase the maximum amount you can borrow, as your EMI financial capacity will increase. When assessing eligibility for a home loan, some lenders may club the income of family members.

2. Maintain a credit score above 750

A higher credit score (preferably around 800) can increase your home loan eligibility because a high credit score indicates your high repayment capacity. Having a high credit score can also earn you a lower interest rate from the lender. You should also check your credit score regularly so that you can take corrective action to improve your score if it is low to avoid loan denial.

3. Sincerely repay your debts

Paying your debts sincerely can help you build a good credit score, which in turn will improve your eligibility for a home loan. Moreover, you should also have some savings and investments which can also increase your eligibility for the home loan.

4. Open an account with your preferred lender

If, after exploring various lenders and comparing the benefits they offer, you have decided on a lender, it is a good idea to open an account with them. This should be done at least a year before applying for a home loan, as you will have plenty of time to establish a relationship with the lender. A good relationship with the lender will increase your eligibility for a home loan.

5. Declare your additional sources of income

Your eligibility for a home loan may be enhanced if you declare additional sources of income as this indicates your higher repayment capacity.

6. Choose a longer tenure

Choosing a longer repayment term can increase your home loan eligibility because the EMI amount will be lower, which means you’re more likely to make timely payments. To the lender, this will appear as a low risk loan to you and by doing so your home loan eligibility will be improved. However, on the other hand, it may cause you to pay higher interest over the life of the loan.