A Home Loan is a type of secured loan, which supports homebuyers financially in purchasing a property. Aspiring Home Loan borrowers need to meet certain predetermined criteria, known as eligibility criteria, to increase their chances of availing of a loan at feasible terms such as a competitive interest rate and a sizeable loan amount. If you are a first-time homebuyer, you should understand how to increase Home Loan eligibility to secure a loan at favourable terms.
6 Smart Ways to Increase Your Home Loan Eligibility
Here are a few tips that will help you increase your housing loan eligibility:
Improve Your Credit Score
Your credit score is an important parameter used to gauge your Home Loan eligibility. Typically, Home Loans are extended at favourable terms to those borrowers who are creditworthy and have a credit score above 750.
The higher the credit score, the better the chances of getting a Home Loan at the best terms. Hence, improving and maintaining a good credit score by paying bills on time and keeping the credit utilisation ratio below 30% can help you avail of a Home Loan at favourable terms.
Disclose All Sources of Income
Income is another important factor that is considered before extending a loan to borrowers. It is advisable to disclose all additional income sources in your application to improve your chances of securing a high loan amount.
Pay Off Existing Loans
Your debt-to-income ratio, which is the amount of debt you have against your monthly income, indicates whether you have enough disposable income to repay your Home Loan. Therefore, clearing off your existing loans before applying for a new one can help you increase your Home Loan eligibility.
Make a Higher Down Payment
You can get 75% 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 in lending you funds and therefore, increase your Home Loan eligibility.
Consider Applying for a Joint Home Loan
If your Home Loan eligibility is low, add a financial co-applicant to your application. Make sure this co-applicant has a good financial standing and credit score. In the case of a joint Home Loan, the income of both applicants is considered, which can help you avail of a substantial loan amount.
Maintain Income Stability
Applicants who have a stable source of income stand a better chance of securing Home Loans at competitive terms. Therefore, borrowers who can showcase stable employment or business vintage of certain years are preferred.
Also Read: Learn How to Calculate Home Loan Eligibility
*Terms and conditions apply.
Factors that Affect Your Housing Loan Eligibility
The housing loan eligibility criteria vary from lender to lender. Knowing the criteria can help one increase eligibility for a Home Loan. Lenders usually consider the following factors:
- Income and employment type of the borrower
- Age of the applicant
- Credit score of the applicant
Note that the eligibility criteria may include other parameters as well.
