Lenders exercise stringent eligibility parameters while approving a home loan application. There are a host of factors that determines the home loan eligibility – of which, age, income, and credit profile are some of the most crucial ones. A loan application gets rejected if the borrower fails to fulfill the set eligibility criteria.
Here are the 5 best ways to strengthen your profile as a borrower and meet the home loan eligibility criteria with ease.
High debt obligations can portray you as a borrower with a lack of resources to pay off your loan. Lenders also assume that you don’t have the discipline to keep up with EMIs requirements. Settling your existing debts will help you clear some obligations, thus allowing you some free income to manage your loan repayment. It also lowers the FOIR, therefore making you credible for lenders.
Your credit score is a major criterion when it comes to approval of a housing loan. A credit score above 750 is considered as an excellent score, which summarises your healthy credit profile and discipline with respect to debt management. Strong creditworthiness has its own set of advantages such as a competitive interest rate and better loan terms. Having said that, the question is, what are the possible ways to enhance your credit score? Avoiding too many debts and loan applications, timely repayment of credit card bills and loan accounts, keeping a check on credit report, etc. can significantly help you in enhancing your credit score.
One of the best ways to ensure home loan approval is to apply for a joint home loan with a spouse or a co-applicant. This considerably increases your chances of home loan approval. In case of joint home loans, lenders consider the income of both the applicants, which eventually enhances the eligibility. Besides, a female co-applicant can help you fetch a lower interest rate. Both the applicants also get to enjoy tax benefits on a joint home loan.
Lenders assess several aspects related to your income, of which job or business consistency is one of the most important. From your earnings to your job switches, lenders scrutinize your income pattern before taking the final call on your case. Switching jobs too often can lower the lender’s confidence, which can lead to rejection. Hence, it is advised to wait in case you have joined recently. Also, the nature of the organization play a decisive role as top private or public entities tend to pay their employees a handsome salary amount on time. For business owners, a stable income source helps them establish a credibility for lenders. Business owners might to need to furnish a bank account and a P&L statement to corroborate their income stability.
A diverse income source means that you are financially equipped to pay off your debts with ease. Your chances of loan approval would increase if you have more than one income source. Some common additional income sources are rental income, part-time business, freelancing, etc. To prove any of these additional income sources, you need to declare a document evidence.
Now that you know the 5 best ways to enhance your loan eligibility, you can take the necessary steps and get your loan application approved. However, it is always a good idea to compare different lenders and check eligibility criteria before zeroing in anyone. The eligibility criteria differs from lender to lender. Therefore, choosing the best lender by identifying eligibility parameters that you can easily achieve will steer clear off any obstacles in getting your loan application approved.