How to maximise your eligibility for home loans
A home loan is a smart way to finance your dream home. However, not everyone is eligible for a home loan. The bank thoroughly reviews your financial situation to assess your eligibility and repayment capacity.
Factors generally considered include your income, employment history, credit score, and repayment capability. Based on this information, the bank can set an interest rate for the loan and the maximum amount you may be eligible to borrow.
Your home loan application can be delayed or even rejected if you do not meet the lender’s cut-off. Thus, checking your eligibility and improving it before applying for a home loan is essential. Here are some crucial strategies and tips to improve your home loan eligibility and enhance your chances of securing a better interest rate.
1. Opt for an extended home loan tenure
Extending the repayment period can reduce your monthly EMIs and increase your chances of being approved for the home loan. However, extending the repayment period will also increase the total interest cost of the loan. Hence, always use online home loan EMI calculators offered by various banking institutions, including IDFC FIRST Bank.
Enter the loan amount, interest rate, and repayment tenure in the IDFC FIRST Bank personal loan EMI calculator. Once you enter these inputs, the calculator will show you the EMIs you must pay. This way, you can choose the right repayment tenure depending on the EMIs you can afford.
2. Make a higher down payment
Generally, banks finance up to 75-90% of the property value, leaving the borrower to finance the remaining cost through a down payment. The size of your down payment impacts the amount you borrow and the interest you pay. If you make a lower down payment, you will have to borrow a higher loan value from the bank and pay a higher home loan interest rate.
3. Avail a joint home loan with a co-applicant
Having a co-applicant can boost your chances of loan approval, especially if you have an insufficient income or a low credit score. Moreover, if your co-applicant has a stable income and a good credit score, you may get approved for a higher loan amount. And if you add a female co-applicant, some lenders may offer you competitive interest rates.
4. Compare home loans offers from multiple lenders
Besides home loan interest rates, you must also compare the terms and conditions of the loan, repayment options, processing fees, prepayment charges, MCLR (Marginal Cost of Funds Based Lending Rate), etc.
Ask your lender how long it takes for a home loan to be approved and disbursed. If you need fast approval and quick funds, you can apply for a home loan online with IDFC FIRST Bank.
5. Declare your additional income sources
Aside from your net monthly income, declare any additional income sources such as income from dividends, fixed deposits, rental properties, or side businesses. This will show the lender that you have a diverse and reliable income stream to repay your home loan on time. Remember that lenders may ask for your proof of income, such as tax returns and bank statements.
Approval on a home loan depends upon your repayment capability. By following the steps and strategies outlined above, you can improve your home loan eligibility and may qualify for better interest rates.