Getting a well-structured home loan is largely considered to be one of the best ways of financing the purchase of a residential property. Not only does such a loan allow you to instantly buy the house of your dreams but it also permits you to avail tax benefits amounting up to Rs. 2 lakh, under Section 24 of the Income Tax act, 1961! This is why it comes as no surprise that people, from almost all walks of life, are extensively taking home loans in order to acquire the houses that they have always longed for!
However, before you finally apply for home loan, you must remember that most banks tend to undertake a highly comprehensive process to check home loan eligibility of all prospective borrowers. For this purpose, they evaluate the applicants’ profile, income, age, debt obligations, earning capacity and employment type. Based on the data obtained through this detailed assessment process, an objective decision is made about whether a home loan should be given out or not.
So, if you too are thinking of availing a home loan, here are five specific things that you can easily do to improve your chances of getting a loan approved –
Improve Your Credit Score
A credit score that falls between 750 to 800 can help you get a home loan within no time. A high credit score does not just display financial discipline on your part, but it also acts as a showcase of your total repayment capacity. What’s more, is that good credit scores can even get you lower interest rates!
Add A Co-Applicant
In case your credit score is not above the aforementioned mark, you can still apply for home loan by adding a co-applicant. This co-applicant can be an earning family member whose credit score is better than yours. Doing so will increase your EMI affordability, thus improving your chances of loan approval.
Declare Additional Income
Whether you are a salaried employee or a self-employed individual, if you have additional sources of income, your chances of loan approval are enhanced greatly! This is because additional income can be used to supplement your repayment capacity, thus making the bank consider you, a credible borrower.
Repay Old Debts
If you have been a frequent borrower from various banking institutions, your ability to repay debts will be determined by going through your previous financial profiles. Old defaults or delayed payments might act as a hindrance for your current loan approval. So, repay all old debts, in full, as soon as you can.
Choose Long Tenures While long tenures might sound like a questionable idea from the interest perspective, such tenures have the potential to substantially increase your chances of getting a home loan approved. This is so because, for most lenders, long tenures imply lower EMIs, greater interaction and thus, timely payments.