How to boost your home loan eligibility?

If you are planning to purchase your dream property, you know that going for a home loan is a much faster and more efficient way. This is because with the boom in the real estate market in recent years, buying a property is a tough call but remember, not an impossible one. The prices are touching the sky, pushing more and more people towards home loans. 

If you plan to go for a home loan, keep in mind that you must check your housing loan eligibility. While this loan can help you make your dream come true and protect you from going ‘All in’, there are certain factors that you need to keep in mind that affect it. To make it clear, a home loan is not easy money lent by a bank as the prime factor, i.e., eligibility is a mandatory step to get it.  

What is a home loan?

It is a secured loan where you have to mortgage your property to your lender. Each month, you have to pay a portion of the principal amount, along with interest, through equated monthly instalments (EMIs). Notably, both the principal amount and interest qualify for a tax deduction. So, when you go for a home loan, you gain complete property ownership at the end of the tenure. 

What is housing loan eligibility?

Housing loan eligibility is a criteria basis where a financial institution assesses whether the customer is creditworthy or not to avail and repay a loan amount. The two prime factors of loan eligibility here are income and repayment capacity of the borrower. However, other factors include the financial position, age, credit history, score, etc.

Here are some of the factors to consider to boost your home loan elibigility –

• Decent Income

A decent income boosts your housing loan eligibility. This is because, as there is no collateral here, financial institutions want to know that you have a decent income from your job and other sources that allow monthly payments. So, the greater your salary, the greater the chances of getting the loan approved. 

• Age

Your youth is the best time to go for a home loan. The lenders look for borrowers who can repay the amount easily and satisfactorily before the retirement age, which is generally 60 years in our country. So, depending on your eligibility amount and loan period, age plays an essential role. 

• A good credit history

In order to boost your housing loan eligibility, it is important to have a worthy credit history. It can be a hurdle for you if you don’t have it. This is because if you don’t have a credit history, the lender will have no reference point to use while analyzing your credit conduct.

• Clear your debt obligations, if any

The debt-to-income ratio is a critical point for lenders to evaluate the eligibility of a home loan applicant. Therefore, if you are an applicant, ensure that you clear all your loan obligations which further positively impacts your eligibility. In addition, you can boost your credit score also by repaying debts. 

• Avoid switching your job.

A small but impactful factor here is avoiding switching your job. For example, if you are salaried and planning to go for a home loan, then try to at least continuously work for two years in an organization. Frequent switching impacts the eligibility amount. Therefore, your planning should be such that you can show two years of continuous service in an organization.