Real estate prices rarely seem to lower, as most people complain. Most homebuyers need to rely on home loans to buy properties. Now, while a home loan is a great way to get the required finances for this purchase, it is also essential to understand the loan amount that the lender can agree to offer you. This would depend on your eligibility for a home loan.
If you are not satisfied with the loan amount being offered, do not worry. There are effective ways in which you can improve your housing loan eligibility. Take a look:
1. Pay off existing loans
It is never good to apply for a home loan while already paying off existing loans. This is because such a case increases the lender’s risk. If your income is already focused on paying off other EMIs, you might find it challenging to pay off a home loan’s EMIs. This is a negative sign for a lender, so it is better to first pay off any existing loans before applying for a housing loan.
2. Declare all additional sources of income
Many borrowers have more than one source of income. This can help in giving their home loan eligibility a good boost. Multiple sources of income can lower the debt-to-income ratio, which means that it is less likely for the borrower to miss out on their EMI payments. So, it is best to declare all additional sources of income to your lender.
3. Maintain a strong credit score
An applicant’s credit score is one of the first things that a lender looks at while evaluating a loan application. It is considered ideal always for keeping a credit score of 750 or more. One can do this by paying off their bills on time and not defaulting on any payments.
4. Avoid going for a short repayment tenure
Some borrowers might prefer a short repayment tenure to clear the loan sooner. However, this means that the monthly installments would be higher. This can be a risk for the lender, increasing the borrower’s debt-to-income ratio. So, to give a boost to your home loan eligibility, it is better to opt for a long repayment tenure.
5. Apply for a joint home loan
If a borrower is concerned about insufficient monthly income, it is better to apply for a joint home loan. With two co-borrowers each earning an active monthly payment, it increases the chances of the loan’s timely repayment.
These are a few ways in which a borrower can boost their home loan eligibility. Also, do not forget to use a home loan eligibility calculator to understand the loan amount that a lender can offer.