New Delhi: The decision to buy a home is exciting, especially when it is your first real estate purchase. Owning a home is a common aspiration and is often a sentimental decision for most of us. The move to buy a property should also be considered as it is a major purchase that requires a significant financial commitment which can last for around 30 years of a person’s life.
Even if you have a sufficient deposit to finance the purchase of a property, it can be difficult to pay such a large amount at once for both the down payment of the property and the rest. In such cases, buyers can always count on home loans – an easy financing option that allows you to access large sums of money at reasonable interest rates, so your dream property is within your reach without any budget constraints.
Home loan lenders these days offer competitive offers and deals, encouraging borrowing with attractive terms. However, to be eligible for such offers, borrowers must meet the minimum requirements of lenders, which help them assess the borrower’s risk profile and repayment capacity. To be able to meet the home loan eligibility criteria of the lender, you should do certain activities pre-emptively to ensure maximum opportunities home loan eligibility and approval. This article helps you track down the factors to keep in mind before applying for a home loan so that you can ensure higher eligibility and other home loan facilities.
Factors to ensure maximum home loan eligibility
There are a number of credit health measures that potential borrowers can adopt to help enhance their home loan eligibility. This will not only improve your chances of getting approved for the home loan amount you want but will also help you avoid home loan rejection – a task that negatively affects your current credit score.
Research your home loan options
The first step in your home loan application journey should be a thorough assessment of your financial needs and shortlisting the lenders most likely to meet your monetary needs. This process will also help you weed out lenders whose offerings do not suit your needs, thereby reducing the chances of home loan rejection. To the best of your ability, lender analysis and comparison is also important for the best offers in the industry.
affordable repayment target
When you decide on the home loan amount, you should try to keep it within your repayment capacity, as borrowing a higher amount can make it difficult to repay the home loan amount. Take stock of your savings and consider making a bigger down payment to reduce your home loan requirement. This will not only reduce your overall cost of borrowing but also reduce the risk of default or delay in payments on your part.
Increase your credit score to 750+
Lenders rely on your credit score to assess your income profile and repayment capacity, so having an ideal score of 750+ would be good for your home loan application. The CIBIL score summarizes your repayment history, income and financial obligations, ongoing loans and credit utilization ratio, allowing the lender to estimate how much you can adjust in your repayment budget to pay off the home loan amount. If your credit score is still not good, consider paying your dues to improve your CIBIL score before applying for a new loan.
Be smart about your repayment tenure
The repayment tenure you choose can determine a lot about your repayment strategy – the size of the EMI, the total interest expense, and the time taken to repay the loan amount. Home loans usually allow longer tenures, giving the borrower up to 30 years to repay the loan amount. While this ensures comfort to the borrower, it can cost them more in terms of interest. Some borrowers may consider opting for a shorter repayment tenure, even if it means a larger EMI. A shorter repayment period can help you save enough as you avoid paying interest for extra months that you might otherwise take to repay your home loan.
Apart from keeping these things in mind, home loan applicants can also use the home loan EMI calculator to arrive at their ideal home loan amount, which is calculated after trying out several combinations on the tool.
(The above article is a consumer connect initiative. This article is a paid publication and does not imply journalistic/editorial involvement of IDPL, and IDPL does not claim any responsibility.)