In the past few years, a home loan has become more affordable than ever. The interest rates are comparatively lower now, and there are more additional features to impact the cost-effectiveness. In this scenario, you can try the following tips to improve your eligibility for a home loan.
- Check for any pre-approved home loan offers:
In order to increase your home loan eligibility, you can check whether you are eligible for any pre-approved offer, which is provided based on your credit history, income, and other factors. This type of offer does not require you to go through a lengthy paperwork process, and the lender may also offer some concession on the home loan interest rates.
· Maintain a higher credit score
A high credit score makes you trustworthy to a lender because it shows your commitment to repaying your debts. Before applying for the loan, make sure to check your credit score. In fact, pay off a few debts and take other corrective measures to improve the score. It might even make you eligible for a home loan balance transfer.
· Ask for a longer tenure on the loan
Lenders might be keener to give you the loan if you ask for a longer tenure. Since you will get more time for repayment, the lenders believe that the chances of defaulting on the loan are low. The chance of loan repayment is typically higher for the ones who opt for a longer tenure. The idea is to reduce the risk for the financial institution, and a longer tenure does just that.
· Seek a joint loan with a co-borrower
If there are other earning members present in the family, make them a co-borrower in the loan. Taking the loan jointly increases your chances of being eligible for it. As such, you can take the loan with your parents, spouse, or siblings.
Co-borrowing has several benefits. Firstly, co-borrowing means the repayment burden is divided between two people. It has its own tax benefits. Also, if the co-borrower has a good credit score, it might make the lender offer a lower interest rate. This means your monthly EMIs are more affordable than before.
· Make a high down payment for your loan
If possible, make a high down payment because that will lower the loan value. Of course, you should cause yourself any financial distress in a bid to increase the down payment. Lenders will not finance more than 90% of your property value.
- Avoid changing jobs too frequently
When you are a salaried individual applying for a house loan, the stability of your employment is an important factor. If you keep changing jobs every six months, it might impact your loan eligibility. Before applying for the loan, it helps to show that you have worked in a company for two years. Also, suddenly going from a salaried individual to a self-employed one can impact your eligibility.
If you take the steps outlined above, it will lower the chances of loan rejection for you. So, start with the first step and check your credit score right away. Move on to the options if your credit score is good enough.