Home loan eligibility criteria take age, credit score, income, location of the property, repayment capacity, etc into consideration. Although it may seem a herculean task, abiding by these five points would enhance and boost your eligibility for quick approval of the home loan.
- Make a higher down payment
RBI puts it that a home loan lender can pay up to 75-90 per cent of the property value (LTV ratio). This means that the borrower needs to arrange for the remaining amount to ensure complete payment of the property. It is a better option to make some payment from your own pocket as well so as to lower your LTV ratio. This would considerably boost your home loan eligibility. So, it would be wise to save in advance if you plan to buy a property in the near future.
- Choose a joint home loan
Opting for a joint home loan gives a punch to your credibility by defining a stable income, better credit score and assured repayment capacity. Addition of a co-applicant also lets you avail a higher loan amount. And if the home loan is being taken in a woman’s name as the first loan holder, then one can also get better offerings on the interest rate as many lenders charge a low rate of interest in case of woman applicants.
- Opt for longer loan tenure
Usually, borrowers go for short loan tenure as they want to end their liability at the earliest. Nobody wants a loan which goes on for a longer duration. But many things need to be considered before making the final call. If one opts for shorter home loan tenure, then it would mean a higher amount to be repaid monthly which can hamper their repayment capacity and in return impact their home loan eligibility. However, a longer loan tenure means comfortable EMIs which are not a burden on your pocket and thereby increasing your eligibility.
It is to be noted that even if you are sufficient enough to pay higher monthly EMIs, then also its better to opt for longer loan tenure. One always has an option of foreclosing the loan or making prepayment when having surplus funds. Fintechs like LoansJagat offers an excellent platform for you to check the prepayment charges charged by lenders and make their choice appropriately.
- Minimise your fixed income to obligation ratio ( FOIR ) to 40-50%
Lenders also consider FOIR (Fixed Obligation to Income Ratio) of the applicant before approving the home loan application. FOIR is defined as that proportion of your income which is being used to meet the repayment of current expenses like other loans EMIs, credit card bills etc. Your home loan eligibility stands at the checkpoint if your FOIR is around 40-50 per cent which indicates that a large portion of your current income is already being used for making payment of current liabilities. Lenders doubt a default in such cases and thus usually reject the home loan applications. So, try to lower your liabilities by repaying them completely or the majority of it to have a lower FOIR and easy home loan approval.
- Build a strong credit score
The credit score is a key parameter for home loan eligibility by lenders. A strong credit score ensures quick home loan approval as it defines your stable finances. A good credit score also puts the borrower in negotiating position wherein they can ask for a better rate of interest. If your credit score is low presently, then try to improve it by regular and disciplined usage of credit cards and timely payments of EMIs. However, if you are short on time and have a good deal in hand, they try to add a co-applicant with better credit score to avail the benefits which come along as lenders also check the credit score of the co-applicant.
It is important to note that while applying for a home loan, don’t bombard different lenders with multiple applications as this seriously hampers your home loan eligibility and damages your credit score as well. Take help from LoansJagat to evaluate different lenders on their offerings and make a wise choice for your home loan.