Avoid Having Your Home Loan Application Rejected By Keeping These Eligibility Tips in Mind
Many homebuyers start saving early on to be able to buy a house. Real estate prices can go relatively high, and depleting most of your savings might not be the best course of action. While it is essential to have good protection, likely, one would still need financial assistance to complete a house purchase.
Most homebuyers apply for home loan plans to arrange for the required finances. A home loan covers up to a certain percentage of the property value, which proves to be of great help. Lenders generally offer up to 20 years for repaying a home loan, which gives borrowers ample time to pay off the loan in monthly installments comfortably. Before applying for a home loan, it is imperative to know your housing loan eligibility criteria. These criteria will play a massive role in your home loan application getting approved or rejected.
The good thing is that borrowers can effectively improve their home loan eligibility by keeping a few simple tips in mind. Read on.
1. Avoid applying for a home loan too late in life
Financial institutions prefer borrowers to earn at least until the Indian repayment tenure. If an applicant applies for a loan in their 40s, the chances are that the loan’s term would exceed the applicant’s retirement. This is considered to be a risk for the lender. So, it is better to apply for a home loan at a young age to be still earning by the time the loan is cleared.
2. Keep an eye on your debt-to-income ratio
While applying for a home loan, if an individual is already under debt, the lender might be apprehensive about approving their loan application. The existing debt obligation means that the applicant’s monthly income is already being used up, leaving less room for taking on a home loan. A low debt-to-income ratio can improve an applicant’s home loan eligibility.
3. Do not frequently change jobs
It is never a good idea to constantly be changing jobs. This is because job-hopping frequently is an indication of instability. This becomes a risk for a financial institution offering the loan. Lenders prefer borrowers who have been employed for a stable tenure at a good company. The reason for this is that borrowers need to have a regular source of income to be able to repay the loan’s monthly installments.
4. Keep a good CIBIL score
All financial institutions check their applicants’ credit scores before offering them loans. A bad credit score is an indication of poor financial responsibility. Clear all bills and dues on time to keep a good credit score. Ideally, lenders prefer borrowers with credit scores of 750 or more.
Thus, keep these tips in mind while applying for a home loan. It is also advisable to use a home loan eligibility calculator before applying for the loan. This home loan calculator is an online tool that will help understand the loan amount that an applicant can qualify for.