5 Points that can increase your home loan eligibility

A home loan is the most preferred credit form among borrowers planning to purchase a residence. To leverage this demand, lending institutions levy nominal interest rates on the said credit form. 

However, potential borrowers are mandated to fulfil home loan eligibility criteria to access the credit. These parameters are a part of the checks conducted by lenders to evaluate an applicant’s credibility.

Individuals should practice ways to improve their loan eligibility. Some of the ways are discussed underneath.

How to increase home loan eligibility effortlessly?

1. Improve CIBIL score

CIBIL score and credit history are the two vital factors that help a lender decode a borrower’s reliability. Hence, it is vital to work in these areas to improve eligibility. Individuals should maintain a 750+ CIBIL score and a remarkable repayment history for easy home loan approval. 

2. Show multiple income sources

Disclosing multiple income sources also help in improving one’s home loan eligibility. Since a home loan is an unsecured credit option, there is always the risk of defaults involved. Showing multiple income sources will affirm lenders of an individual’s repayment capability.

Therefore, individuals should keep the documents required for home loan and papers showing additional income sources handy.

3. Apply for a joint loan

Individuals with a poor credit history can always take the help of a co-applicant. The presence of a guarantor with longer workable years and a 750+ CIBIL score naturally increase the home loan eligibility. 

4. Choose the right repayment tenor

Home loan applicants generally get the flexibility of choosing the loan tenor. This makes the repayment process compatible with their financial capabilities. For instance, choosing a long tenor will reduce the EMI outgo and help save on disposable income. However, it may increase the total interest outgo. Comparatively, a short tenor will help save more on the housing loan interest rate. 

5. Reduce the debt to income ratio

DTI or debt to income ratio helps a lender understand an individual’s capability to avail a loan without straining his/her finance. Therefore, it is recommended to maintain a 40% or lower DTI to improve home loan eligibility.

Potential borrowers should work in these areas to improve their chances of home loan approval.