When you extend the loan tenure, your home loan eligibility increases since the lender will see that you have more time to repay the loan. As a result, the chance of repaying debt on time rises. Loans with a longer-term give the borrower more time to repay, ensuring timely payment and reducing the lender’s risk.
Factors that Help you in Enhancing Your Home Loan Eligibility
Prepay Your Loan Balance
Try to pay off any existing loans before applying for a new loan. If you can’t pay back a loan, the lender may decrease the loan amount or charge you a higher interest rate. The lender may think that granting further loans would result in late or non-payment of existing debts. Lenders might even deny it.
Loan borrowing is one of the most challenging and significant financial choices one can make. So, by the simple steps mentioned above, you may improve your home loan eligibility and buy the house of your dreams.
Enhance Your CIBIL Rating
Your credit score is critical in determining your loan approval and loan amount. A credit score of at least 750 is usually perfect since it indicates that you are the lender’s credit-worthy and risk-free borrower. According to CIBIL, “79% of loans or credit cards are authorized for people who have a CIBIL Score of at least 750.” A good CIBIL score translates into reduced interest rates on house loans.
Avoid Panic and Haste
Don’t panic or hurry while applying for a mortgage. It takes time and effort to qualify for a home loan. Compare loan options, pick between fixed and variable interest rates, and choose desired interest rates with minor additional expenses.
Add an Extra Source of Income
Adding another source of income may also be beneficial. Additionally, you may earn money via rental income, a part-time business, or renting equipment and machinery. Additional income improves your chances of receiving a more considerable loan amount since it improves your financial health.
Include Your Partner’s Name as Co-Applicant
Adding a working spouse or a spouse with good credit as a co-applicant may increase the loan amount approved. Co-applicants may be a spouse, family member, or sibling. Most lenders look at family income sharing. Adding names may substantially boost revenue, allowing for a cheaper interest rate home loan.
Open an Account with the Lender of Your Choice
Suppose you’ve chosen a lender and intend to apply within a year or earlier. In that case, you may contact the lender by opening a financial institution account well in advance of applying for any loan. Thereby, you will ensure that the lender of your preference gives you preference when you apply for a loan shortly.
Think About Taking Out Step-Up Loans
Step-up loans are preferable for those with smaller monthly net incomes or who can’t afford high loan EMIs owing to other monthly expenses. Step-up loans start with smaller EMIs and gradually increase to prove that the borrower is financially secure enough to repay the entire loan amount.