Over the previous three years, interest rates and fees have decreased, making it easier to acquire your dream house with a home loan. If you want to buy a house, a home loan from a reputable financial institution is simple to obtain. If you’re a first-time home buyer, a little research can not only help you qualify for a loan but will also disclose some critical details that you should be aware of.
There may be some roadblocks in the way of your home loan approval that you may overcome by learning more about the application process. It is not difficult to meet the lending party’s qualifying requirements. Before approving your house loan application, any reputable bank or non-banking finance firm will look at a few factors such as your credit score, loan length, repayment capacity, income, and so on.
Improve credit score
When you apply for a home loan, the lender will review your credit report and score in order to assess your creditworthiness. Any financial lender appreciates a good credit score since it lowers the risk quotient. To get there, you must make sure that all of your loans and credit card obligations are paid on time. Any form of delay or default can have a significant negative influence on your credit score. A credit score of 750 or more is considered excellent by most leading organizations when it comes to loan applications. Low-interest rates on house loans are often associated with good credit ratings.
Longer loan tenure
Repayment of a home loan is a commitment made for the rest of one’s life. If you want to boost your home loan eligibility, ask for a loan with a longer-term. It’s crucial to remember that a longer-term house loan lowers your EMI. It also raises the total amount of interest you’ll have to pay. As a result, allow for a greater cost of applying for a home loan while choosing a longer payback period.
Keep your FOIR below 30%
The Fixed Obligation to Income Ratio, or FOIR, is the proportion of your debts to your income. It’s also known as the Debt-to-Income Ratio. Most lending institutions demand your FOIR to be less than 30% of the money you’ll spend on a daily basis. Limit your FOIR below 30% when applying for a house loan to boost your chances of acquiring a home loan swiftly and easily.
Opt for joint home loans
One of the smartest moves you can make to improve your chances of securing a home loan is to apply with a family member who works. As a co-applicant, you can also include your spouse. This will significantly increase your eligibility and provide you with additional benefits like as cheaper interest rates, simple repayment options, and more flexible terms. Furthermore, co-borrowing splits the EMI burden and provides tax advantages.
Additional Income Source
Your home loan eligibility will undoubtedly improve with the addition of a second source of income. It might be a source of rental revenue, a side business, or supplemental income. When applying for a home loan, this will increase your trustworthiness and repayment capabilities. Renting out a second home or apartment, for example, will provide you with an additional source of income to demonstrate your eligibility.
Don’t change jobs frequently
Avoid frequent work changes if you are a paid employee intending to secure home loans. If you don’t work for a company for two years straight, your house loan eligibility will be jeopardized. Prior to presenting your application to the lender, careful planning is essential.
