Most Home Loan applications are approved after a lot of consideration. Every financial institution which disburses Home Loans wants to make sure that you, as a borrower, will return their money on time. Aside from trusting you to be punctual with your EMIs, they also need to be certain that you’ll abide by the terms and conditions associated with your Home Loan.

Some Tips to Get Your Home Loan Application Approved Without Any Hassles

Have a Clear Understanding of Your Financial Condition :

Before you even think of applying for a Home Loan, take a close look at whether you actually have the finances to comfortably pay back the loan. One of the main requirements for availing a Home Loan is to clear your EMIs on time.Many lenders will have a minimum salary requirement, which varies from city to city. For example, if you’re living in Delhi or Mumbai, Bajaj Finserv has a minimum salary requirement of INR 80,000 pm. But, if you are living in Pune or Kolkata, the salary requirement is just INR 45,000 pm. Knowing if you earn enough salary for a Home Loan is extremely crucial to making sure your application gets approved.

Pay More Now to Pay Less Later :

Once you know the cost of the property you wish to purchase, try to raise at least 20% of that amount as down payment. The less money you borrow, the less money you need pay back.
Since loans are always paid back with interest, it makes sense to reduce the amount of extra money which is not a part of your property value. It might also get you a lower interest rate and make lenders treat you as a customer who poses a low risk to their finances.

Maintain Your Credit Score :

There are ways to boost your eligibility for a Home Loan. Banks and financial institutions base most of their loan decisions on your CIBIL score. Your CIBIL score tells the lender how good you are with your investments and how much of a loan you can actually handle. In order to maintain a good CIBIL Score for a Home Loan, you need to have a clean financial record.Make sure your credit cards aren’t maxed out, clear off all your outstanding debt and most importantly, do not make too many enquiries for Home Loans. Pick your lenders carefully and make sure you only submit an application if you are sure of it being approved.

Utilise the Co-applicant Feature :

If you can, try to get your parent or spouse as a co-applicant. This can significantly raise your chances of getting your application approved, especially if your co-applicant is also earning a sizeable income.Banks allow you to club the net income of your parent or spouse while applying for a loan. This lets them know that you are quite capable of paying their loan back in time, even if your income alone does not qualify you as an eligible borrower.

Providing Guarantors or Collateral :

This is a move you should make only if you are in a situation where you think you need to provide some form of security to the lender. The advantage you gain is that a secured loan is provided at a lower rate of interest when compared to an unsecured loan.You don’t even need to provide physical assets as collateral; companies like Bajaj Finserv offers Loans Against Securities. This way you can secure a loan using your shares as collateral while continuing to earn yearly dividends from them.

Pay Attention to the Application Form :

One of the worst reasons for having a Home Loan application rejected are invalid application forms. Be extremely careful while filling up the form and never lie about any of your details.Being thorough with the form will also make sure that there are no hidden clauses which could catch you off-guard later.Avoid making mistakes with your account numbers and salary details. If you’ve been good with your finances in the past, your application will speak for itself, and your loan will be approved in a jiffy.

Important Factors Affecting Your Eligibility for Home Loan

Debt

Before disbursing loans, financial institutions first take a look at a borrower’s financial records. They compare your current recurring debts to your monthly income and calculate a debt-to-income (DTI) ratio. Most institutions have a maximum DTI limit to filter out borrowers who can comfortably afford loan repayments. Usually, this limit maxes out at 40% to 45% of your monthly income.

Try to minimize your debts before applying for a new loan, and you would have a good chance of availing low Home Loan interest rates.

Credit Score

Your Credit Information Bureau India Limited (CIBIL) score is a crucial factor affecting Home Loan costs. A credit score determines your ability to repay a loan. In simple words, the higher your credit score, the easier it’ll be for you to get a loan. A bad credit score can make you ineligible for a Home Loan. So before applying, check your credit report and figure out a way to raise your score if you need to.

Down Payment

Financial institutions take into account the amount of money you put into the down payment. Usually, you’ll end up paying at least 20% of the property price upfront. When you have a substantial stake in the property, lenders interpret that as a lower risk to themselves. This gives them the confidence to give you a loan for your property. However, if you can only make a small down payment you may also have to pay for private mortgage insurance (PMI) to provide security to the lender in case you default.

Employment History

If you have a strong and steady employment history, you will notice that lenders are easily willing to give you a loan. Lenders trust people who have been working in the same field and with the same employer for at least three years. Such an employment history proves that the borrower is reliable and responsible, and is likely to repay the loan on time.

Profession

Not only is your monthly income a major deciding factor, but so is the profession that you’re in. If you’re an established lawyer, doctor, chartered accountant, etc., this will affect your interest rates positively. However, if you work in the media, or are self-employed in unconventional businesses, your loan eligibility might decrease. If you’re in such a position, remember to have an open discussion with your lender regarding this particular factor.

Age

Another factor affecting your Home Loan interest rate is your age. The younger you are, the better your chances of getting a good Home Loan. Financial institutions calculate your date of retirement to see how many earning years you have left. Because of this, younger borrowers get loans with longer tenures and lower interest rates.

Property Location

The location of your house often determines the loan pricing. Places with high property prices usually have to pay higher interest rates on their Home Loans. For example, cities like Mumbai and Delhi have higher rates than Chennai and Kolkata. So do your homework and double check the rates before you decide on a Home Loan to apply for.

<< Click here to Check Home Loan Eligibility >>

<< Click here to Calculate Home Loan EMI >>

<< Click here to Apply for Home Loan >>