Thinking about buying the dream home for your family? If you are, then this article will be of much use to you.
Buying a property involves a lot of money, and thus it is an important decision in anyone’s life. There are so many arrangements to be made. There are just as many contacts to get in touch with and adjustments to be made in the final deal.
Most of the time it does happen that the dream home one desires is in reality out of one’s reach. It is at such junctures that you have to make an important decision. Do you want to go ahead and still make that expensive purchase, or opt out to save money for something else?
Before you begin the application process, assess your eligibility factor. By now, you may have already finalized on a lender. If so, you also know the eligibility factors. If so, do you meet those factors? If yes, great! If not, don’t apply yet. Instead take the time to increase your eligibility criteria.
When you apply, the lender shall assess your ability to repay the loan within a stipulated time frame.
This is defined as the maximum money you can get as a loan, and it is based on several criteria like your current level and sources of income, age, repayment capacity, credit score and other factors.
In this article, we will show you several ways that you can use to boost your home loan eligibility without any problem.
If you still have existing loans, you may want to repay those first. This is because otherwise it can be harder for you to manage repayment of all the loans. Your prospective lender knows this, and that if you have multiple loans already it becomes risky for the lender if you are not able to repay.
Thus, there are increased chances of your application being rejected. It is better if you close all current loans before getting a new one. And don’t forget to get a No-Due certificate and get this updated in your credit report.
Increasing the loan tenure means you’ll be repaying the loan over time. This makes things easier for you, and by extension, it makes it easier for the lender. When you pay over a longer period of time, your EMI amounts go down. And that makes it easier for you to repay. If you choose to get a longer tenure, you are more likely to get the loan since it means there is less risk for the lender. However, do understand that having a longer tenure means giving more interest to the bank or lender.
Fixed Obligation to Income Ratio or FOIR is that part of your income that goes into repaying loans. FOIR therefore is an important component for determining your eligibility.
The higher your FOIR is, the less chances you have of getting the loan. Thus, you need to keep the FOIR percentage lower than 40%. This boosts your chances of getting the home loan.
To get most loans, you need a strong credit report, which means the credit score needs to be high enough. While most banks have a specific criteria for credit scores, it is generally agreed that you need to have a score of more than 750. The nearer it is to 900 the more are your chances of getting the loan of your choice.
Want to make it easier for yourself to get the home loan? Opt for a joint home loan. When you do this, another person is the co-applicant and thus the co-guarantor. In case you can’t repay for some reason, the other person will have to repay. Opting for a joint home loan makes it easier for you to get the loan since it is seen as less risky by lenders.
Finally, you may want to get an additional source of income, or maybe boost your income level from your current sources. The more income avenues you have and the higher your income level is, the more chances you have of getting a home loan.
After applying all these tips, you have more chances of getting the home loan.