Due to the increasing price of real estate, many potential homebuyers are availing a home loan to purchase their dream property. However, before applying for a housing loan, you must check your housing loan eligibility with the help of an online home loan eligibility calculator. This will boost the approval chances of your loan application. Additionally, there are certain measures that you can take from your end to enhance your loan eligibility. Some of those are mentioned below:
- Maintain a high credit score
A high credit score of 750 or above can not only improve your loan eligibility but also help avail a higher loan amount at a reasonable interest rate. This is because a high credit score would reflect your good repayment capacity, and hence, lenders may consider you a low-risk borrower. You can maintain a high credit score by making timely repayment of your existing loans, minimizing credit utilization ratio, and having the right credit mix.
- Apply for a joint home loan
You can also boost your loan eligibility by adding an earning family member as a co-applicant to your housing loan. Since the repayment burden will be shared between two individuals, the chances of defaulting on the loan would reduce drastically. The lenders may think of you as a low-risk borrower, and consequently, your housing loan eligibility may improve.
- Clear outstanding dues
Your loan eligibility depends significantly on your debt-to-income ratio. A debt-to-income ratio reflects the proportion of your monthly income spent towards paying off existing debts. If you have a running personal loan, car loan, etc, consider clearing them before you apply for a home loan. This will reduce your debt obligation, thereby improving your home loan eligibility to a certain extent.
- Highlight additional income
If you have any additional income apart from your monthly salary, you must bring it to the lender’s notice when applying for the loan. This is because the higher your income, the higher will be your repayment capacity, and consequently better will be your loan eligibility.
- Opt for a long-term home loan
A longer repayment tenure would translate to lower EMIs, thereby reducing the risk of loan default. Thus, by opting for a long-term housing loan you can improve your loan eligibility. However, by choosing a longer tenure, you would be spending more towards the total interest outgo. This, in turn, can increase your overall cost of borrowing. On the other hand, by paying off your loan within a short duration, you can bring down the total loan cost by saving on the interest pay-out.
It is advisable to make use of an online EMI calculator before you apply for a home loan. This will help you settle for an ideal EMI depending upon your monthly budget.
The above-mentioned tips can boost your eligibility for a housing loan and help you purchase your dream home by availing the right loan amount. Lastly, ensure to read and understand the terms and conditions of the loan agreement carefully before making any final decision.