Aspiring Home Loan borrowers are offered a loan based on whether they meet their chosen lender's eligibility criteria. Further, the maximum loan amount that an applicant can be offered as well as the terms and conditions of a loan are decided based on how well a person meets a lender's specified eligibility criteria. If you are a first-time homebuyer , you must understand how to increase Home Loan eligibility – this will help you avail of a loan on good terms and conditions.
How to Increase Loan Eligibility?
Here are a few tips that will help you increase your Home Loan eligibility.
Work on Your Credit Score
Lenders extend their best loan offers to borrowers they can trust with repayments. Your CIBIL score denotes your repayment capability -- the higher your credit score, the better your chances of getting a good Home Loan deal. So, before applying for a Home Loan, make sure your CIBIL score is at least 750.
Reduce Your Debt
If you already have way too many loans, your lender will perceive you as a high-risk borrower since your debt burden is already on the higher side. To increase your Home Loan eligibility, clear some loans before applying for a new one.
Make a Higher Down Payment
Lenders sanction up to 80% to 90% of a property's value as a Home Loan. The remaining amount, known as the down payment, must be paid by the borrower. When you make a higher down payment, you reduce the risk involved for the lender in lending you money and therefore, increase your Home Loan eligibility.
If you are planning to apply for a Home Loan you must develop an understanding of the factors that affect Home Loan eligibility. Over and above the factors mentioned above, here are a few more tips that will help you increase your loan eligibility.
- Avoid frequent job changes as changing too many jobs in too little time portrays you as a risky borrower.
- If your Home Loan eligibility is low, add a co-applicant to your application. Make sure this co-applicant has a good credit score.
- If you do not meet your lender's income eligibility requirements, disclose all additional income sources in your application.
- Always keep your Fixed Obligation to Income Ratio (FOIR) under 40%.
Also Read: Learn How to Calculate Home Loan Eligibility
*Terms and conditions apply.
