Buying a home involves going over lots of essential aspects that call for serious consideration. You need to be mentally and financially prepared to make such a big decision. As for the financial aspect, most of us depend on Home Loans.
Sometimes, problems may arise concerning the approval of your application, which may result in the rejection of your home loan application.
Even the smallest mistake or carelessness on your part can result in your Home Loan application getting rejected. If you are planning to buy a house and need to know how to easily and effectively apply for a home loan, reading this write-up will assist you through the process.
Useful Tips to Increase Your Chance of Getting A Home Loan
The lender will review your credit report to check your creditworthiness and determine your loan eligibility. Checking the CIBIL score is a standard procedure to check your home loan eligibility. The CIBIL score is a report of your credits, providing the lender details about your other due loans and how much loan is possible for you to repay.
To maintain a good score, it is important that you are very punctual with all your credit card payments and there are no outstanding debts in your name. Also, maintaining a low CUR (credit utilisation ratio) will enhance your credit score.
Banks and all the other financial institutions from where you can get your home loans use varying credit bureau scores, with a score of 750 or more considered favourable for approval of home loans. Also, having a good CIBIL score can help you get a home loan at lower interest rates.
Be Aware of Your Financial Condition
Whether applying for a NRI home loans or any other home loan, the capacity to pay the EMIs timely is one of the first conditions that home loan approvals depend upon. Instead of getting carried away, be practical and understand your financial condition to reach a proper conclusion.
Also, the lenders provide different Home Loan amounts for different salary slabs. Hence, knowing your repayment capacity and how much loan you are eligible for is essential before filling up your home loan application.
Opt for a Long Home Loan Repayment Tenure
Opting for a long repayment tenure can increase your chances of getting home loan approvals. This is because longer home loan tenure increases the total home loan interest payable by you.
By selecting a long payback period, your borrowing cost gets higher, thereby improving your chances of getting the home loan sanctioned.
Clear All Debt Obligations
When lending institutions check your eligibility, they check your Debt-to-Income (DTI) ratio. Hence, it is recommended that before applying for a home loan, it is better to clear other loan obligations. This will boost your credit score and positively impact your home loan application.
Go For Joint Home Loans
With multiple earning members in the family, you can jointly apply for home loan. The chances of getting approval are also higher when you plan to share the loan with your spouse or parents. This also offers useful tax benefits, and your co-borrowers’ good credit score can help increase the overall home loan eligibility.
Opt For A Higher Down Payment
Lower down payments attract higher loan values at interest rates. When you apply for a home loan and the same gets approved, you still have to make a down payment. The lending institution pays about 75% to 90% of the property’s actual value. It is always advisable to make higher down payments to avoid exorbitant interest rates.
Give Proper Declaration For Additional Income Sources
When you declare additional sources of income, you increase your chances of getting quick approval for home loans. This is because additional income sources positively affect the loan repayment capacity and improve your financial health, thereby having a positive result for your home loan application.
Keeping the tips mentioned above in mind can increase your chances of getting home loan approvals. Start by checking and reviewing your credit score and trying to improve them.
Make sure to check your credit scores properly and correct mistakes before it’s too late. Saving for your down payment and maintaining a low DTI ratio is the key to getting quick home loan approvals.