Any individual would dream of buying his or her own house in the future. This decision is not an easy one considering property prices are quite expensive. Financial institutions offer home loans that provide financial assistance for property purchases. Of course, a home loan does not cover the entire property cost, but up to 80-90% of it. The exact cover would depend on each borrower’s housing loan eligibility criteria.
Now, many homebuyers prefer to get the maximum coverage possible when they apply for home loan plans. For this, they need to enhance their eligibility for a higher loan amount. The good news is that it is possible to take certain steps that can improve your eligibility for a higher loan amount.
Let’s take a look at a few ways in which you can successfully improve your eligibility for a home loan:
- Opt for a longer repayment tenure
Some borrowers prefer to go for short repayment tenures. This way, they clear off the loan sooner and even manage to save money on the interest payments by cutting down the number of monthly instalments. However, if you are looking to improve your home loan eligibility, it is better to opt for a long repayment tenure. This is because a long tenure means smaller EMIs, which are easier to pay off. Smaller EMIs means that it is less likely for you to miss out on payments, thereby reducing the lender’s risk. This helps in improving your home loan eligibility.
- Try to offer a higher down payment
As mentioned, a home loan only covers up to 80-90% of a property cost, which means that you will have to cover the remaining 10-20%. To improve your eligibility for a housing loan, it is better to try to put down a higher down payment. This will also help in lowering the interest payments on the loan since the loan amount is lower.
- Keep a good CIBIL score
Any applicant who is looking to get a home loan needs to maintain a good credit score. Before approving home loan applications, financial institutions will need to evaluate the credit scores of their applicants. Ideally, one should maintain a score of 750 or more in order to enhance their eligibility for a home loan.
- Clear off any existing debt
If you are already under debt and a large chunk of your monthly income goes towards clearing it, there won’t be much room to accommodate a home loan. This is not preferable for a lender. To give a boost to your home loan eligibility, it is better to pay off all existing debt obligations before applying for a home loan.
All of these tips can be useful in improving your eligibility for a housing loan. Before speaking to a lender, it is also advisable to use a home loan eligibility calculator to learn about the loan amount you currently qualify for.