With the present repo rate staying at 4% in 2021, the RBI has maintained its lenient posture. The interest rate on home loans has decreased as a result of a low repo rate. As a result, it provides borrowers with a great opportunity to use housing credit to meet their needs in terms of money.
However, different lending organizations have different requirements that borrowers must meet in order to be approved for a home loan. Before applying for a home loan, it is advisable to review the requirements and figure out how to meet them better.
5 tips to improve eligibility criteria
The following advice can be used by applicants to increase their home loan eligibility:
Add a co-applicant
If the borrowers apply for a joint loan, the likelihood that the home loan will be accepted may increase. To boost their eligibility, they might add their spouse, kids, siblings, and parents as co-applicants. Additionally, in some circumstances, adding a female co-applicant can lead to lower interest rates.
They must, however, be financially secure and have a strong credit rating.
Improve CIBIL score
What is the CIBIL score and why is it significant, one may wonder. A person’s repayment history is reflected in their CIBIL score, which can be used to respond to this query.
When deciding whether to apply for a home loan, one must keep in mind that the CIBIL score for a home loan is crucial to its approval. A CIBIL score of 750 or more is typically advised because a lender views this as indicating a borrower who is responsible and makes payments on time.
Pay off existing debts
A person’s ability to qualify for a home loan may be impacted by ambiguous loans because they raise the debt-to-income ratio. Lenders believe that these borrowers are overly focused on credit and may not make timely payments. They might even reject the loan application in specific circumstances.
As a result, one needs to pay off any current debt and secure a No Objection Certificate. This has to be updated and appear on their credit report.
Choose longer tenure
One can choose a lengthier house loan tenor to boost their eligibility for a loan. The monthly payments are decreased with a longer payback time. This will lessen the excess financial load and guarantee that the person has adequate cash on hand to handle other financial commitments as well.
The number of monthly installments due can be calculated by the borrower using an online home loan calculator. They can also make the necessary adjustments to find an EMI figure that suits them.
Add other income sources
To increase their chances of getting a loan, applicants can provide proof of extra sources of income. They can demonstrate their revenue sources, such as rentals, side businesses, investments, etc. This will demonstrate that a borrower has the financial resources to repay a loan without difficulty.
Along with this, increasing the down payment is a prominent technique to increase eligibility for a home loan.
What are the eligibility criteria for a home loan?
Different qualifying requirements are set forth by lending institutions for salaried and self-employed people. Here are the specifics:
Salaried individuals
- The applicant must reside in India and be between the ages of 23 and 62.
- They ought to have a credit score of at least 750.
- They need to have worked for at least three years.
- The monthly income must fall within the range that lenders have set based on the city of residence.
Self-employed individuals
- The applicant must be an Indian resident who is between the ages of 25 and 70.
- A 750 credit score is required.
- Their company should be at least five years old.
- The financial institution’s minimum required turnover must be produced by the applicant.
One can easily get eligible for a loan by fulfilling these requirements.
Additionally, some financial institutions extend pre-approved offers to their current consumers to speed up the loan application procedure. Such offers are available to borrowers for financial products including home loans and loans against property, among others. By entering the necessary information, potential clients can examine the pre-approved offers they have received.
To increase their home loan eligibility, chances of getting a loan authorized, and ability to buy their dream home, people must adhere to the strategies outlined above.
