Everyone harbours the dream of buying a house of one’s own. Finalizing the location, size, layout and other such parameters is a daunting task. Several factors like accessibility, price, proximity to essential establishments like schools, hospitals, market etc. need to be considered. After you are through with the house hunting process comes the next task of arranging for the finances for the same. Most people depend on home loans for this purpose. So this starts another set of tasks of talking to different lenders and finding out about interest rates, tenure and selecting the best option that suits your pocket. But before you do so you would want to make sure that you are eligible for the home loan. Here are 5 tips that will help in making yourself more appealing to the lenders and increase your chances of getting a home loan.
Show sufficient income level- Taking a home loan is a big financial commitment. The monthly EMIs take up a significant amount of your monthly salary. The bank needs to make sure that you earn sufficient income so that you can make the EMI payments easily from the savings left after meeting your monthly expenses. So if you bring sufficient proof of regular monthly income it will show that you have the capacity to pay back the loan amount. You can also bring proofs of the savings that you have in the form of FDs, shares etc. which can be used in case of emergencies. If you have sufficient reserves to fall back on, then it increases your chances of home loan approval. If your spouse is working too, you can show proofs of both the incomes of the household.
Current debt levels- Your current financial commitments are also taken into consideration before approving a new loan. If a portion of your income is already going towards meeting previous debt obligations, then the amount of income available to service a new loan reduces. Hence banks pay attention to the debt to income ratio that is calculated by dividing the total monthly debt payments by the monthly income. Banks usually get this information from CIBIL who have detailed information about the dues of each borrower. This includes both loans as well as credit card outstanding balances. If your debt to income ratio is low, your HDFC home loan application is more likely to get approved.
Check your Credit Report for errors- Most banks and financial institutions use your credit report to base their approval decisions. Check your credit report for errors. You do not want lenders to see an incorrect picture of your financial behaviour. So if there are errors in the report, get them corrected by raising a dispute online. It is advisable to check your report once every year.
Pay attention to CIBIL score- Check your CIBIL score to see yourself from the lens of the lender. If you have a low credit score, you must pay attention to the factors that go in the CIBIL score calculation. If you work on improving your credit score you will not only increase your chances of approval but may also become eligible for discounted rates.
Increase down payment amount- If you offer a greater percentage of the cost of house as down payment, then the bank gets an assurance that you are serious about owning the house. Since your own money is also at stake you will responsibly make the EMI payments. If your income does not allow you to get approval for a large loan amount, you may offer a bigger down payment. When the loan amount is less, the EMI will be less and chances of approval of the required loan amount will be high.
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