In India, more than 70% of home buyers rely on a home loan to get the necessary funds for the purchase. Apart from providing the required money to purchase the home, the home loan also offers other benefits like a tax deduction and easy repayment option. Today, although the financial institutions in India offer different types of home loans to suit the varying needs of the people, they sanction the loan only if the applicant meets their eligibility criteria.
So, if you are looking to apply for a home loan, here are a few tips to help you boost your chances of getting your application approved by the lender.
Repay your existing dues
One of the most important things that the lenders consider before approving the loan is your repayment capacity. So, if you have any existing dues, the lender may categorise you as ‘high risk’ borrower. So, to avoid this situation, it is advisable that you focus on repaying the existing dues before approaching the lender for your home loan. If you have any existing loan, be it car loan or credit card dues, make sure to get the ‘no-due’ certificate from the lender. This will not only underpin your repayment capacity but also improve your chances of getting your home loan approved.
Know your CIBIL score and improve it
The CIBIL score is a three-digit number that reflects your creditworthiness. It is a critical factor that the lenders consider before approving home loans. If your credit score is low, or if you have no score at all, the chances are high that your home loan application will be rejected. The best way to improve the credit score is to be diligent in your loan and credit card dues repayment. Keep the credit utilisation ratio to about 20 to 30% of the cards limits. Avoid late repayments of the loan; even if you miss a single EMI or repay the dues one date late, it can have a significant impact on your credit score.
So, if you wish to have a hassle-free home loan borrowing experience, make sure to improve your credit score. Most lenders in India consider a score of 700 or more as an ideal score for approving home loans.
Apply for a joint home loan
One of the definitive ways to get your home loan approved, as the experts recommend is to apply for a joint loan with any of your earning family members as a co-applicant. This not only increases your eligibility for the loan but also helps you avail better benefits. When you apply for a joint loan, you can club the income of both the applicants and avail a higher loan amount. Also, since both of you will be sharing the responsibility of the repayment, both of you can individually avail tax benefits.
Opt for a longer duration
When you apply for a home loan, tenure is an essential factor to consider. It plays a vital role in determining the EMI amount. Generally, if you opt for a longer duration, the EMI is low, and vice-versa. Loans with more extended period can help you repay the loan easily without having to compensate on your other expenses. But, remember you must have to repay the loan consistently for a long time. You can use the home loan calculator, an online tool to determine the suitable tenure so that the EMI is affordable.
So, there are more than one ways to increase your chances of getting the loan approved. The key to qualifying for the loan is to maintain financial discipline and repay the dues well and showcase to the lender that you can repay the borrowed amount promptly.
