5 Ways to Improve Your Loan Eligibility
December 17th, 2020
In our lifetime, one of the biggest financial decisions that we make is owning a house for our family. However, it is shared knowledge that getting a home loan is the only way a person who is in his 30’s or early 40’s can afford his family home. It is a huge decision you are taking, and hence you must make the right decision while taking a home loan. If you’re opting for a home loan, it’s crucial to understand everything about it. Let’s check out the top five ways in which you can improve your loan eligibility.
- Improve your Credit Score
- Add all Incomes and Bonuses
- Clear Existing Debt Obligations
- Opt Longer Tenures
- Better Employment Status
Having a credit score of 750 and above can instantly influence the home loan rates of interest. The score will be concluded based on factors such as repayment history, the number of existing loans, and credit card dues. The lender estimates your financial credibility to evaluate the repayment capacity before sanctioning the home loan.
Lenders often set an income criterion based on the city and the job you do. Meeting these criteria will easily get you a home loan without any hassle. Apart from the salaries, every other source of income such as bonus amounts, rental income, and any other sources must be added before applying, and it boosts your loan eligibility. Experts suggest that adding a co-applicant while applying a home loan would also do the trick.
Lenders pay special attention to the repayment pattern and having several debts and loans is not exactly a hurdle for a home loan. It’s always the unpaid dues that become a concern for the lenders. Missing EMI due dates, and regular failures in repayment, and unpaid dues can be a reason for loan rejection. Hence, to get a higher amount of sanctioned, it is vital to keep a disciplined credit repayment history.
Choosing longer loan tenures will result in lower EMIs, which will automatically reduce the fixed obligation to income ratio of a loan applicant. Opting for higher home loan amounts increases EMI affordability and, thereby, loan amount eligibility. Several financial institutions now offer longer home loans of 25 to 40 years. Moreover, prepaying your loans will not only improve the credit score but also helps you pay less as long-tenure loans have higher interests.
The chances are high when you are employed with an MNC or a reputed private or public sector, as it is more dependable as a borrower. Lenders will have thorough research on your employment status before approving the loan. Someone with an unstable job or a business will comparatively have a lesser chance than others, who has a stable employment status.