Are you looking to buy your first home? Are you unsure whether or not you can get approved for a home loan? Buying a house is a big purchase and when comparing the amount of money needed to buy the house with the amount of money we can make in our careers, it is clearly an important purchase. When looking to get approved for a home loan there are many things that are taken into consideration. It can be difficult to predict which of those will be key factors in whether or not you will get approved for a home loan.
You’ve been looking for your ideal house for a long time and have finally got it. It satisfies all of your needs in terms of price, location, and size. You have enough money for the down payment by budgeting carefully. Now, apply for a home loan, and the house will be yours!
But first, you must understand why your application can be refused even with the cheap home loan rates in India and what you can do to guarantee that it is accepted quickly. There are several factors which define your loan approval chances. Let us take a look at how different factors can impact the level of risk taken on lending you money for your home.
Let’s have a look at what these are:
1) Good credit score:
A good credit score can make life better in many ways. Building a decent credit score and payment history helps you to get the best home loan but that might take anywhere from 24 to 36 months. If you want to get a reasonable interest rate on a house loan, you’ll need a CIBIL score above 750. Here are some suggestions for raising your score:
- Never let your credit card or current debts go into default.
- Don’t use your credit card to the limit every month.
- Always pay your loan EMIs and credit card balances on time.
- On credit cards, do not pay merely the minimum amount due.
- Don’t take out too many loans at once.
2) Pay off existing debt:
You haven’t defaulted on any of your previous loans. Great! Clear other outstanding debts as much as possible to help speed up the home loan approval procedure. Assume you bought a smartphone on EMI a year earlier. Try to pay off the debt as soon as possible.
When a married couple applies for a house loan together, the loan is more likely to be accepted. Lenders like two persons repaying a loan since it indicates the household has extra income and is in an excellent financial position. A sibling or a parent might potentially apply for a house loan with you. The Shared Loan experience is a great way to borrow money that implies that you may be eligible for a larger loan since your repayment ability is incredible.
4) Apply for a position with a longer term:
Lenders may be more inclined to lend if you ask for a longer term house loan. The stress of monthly EMIs is reduced. If feasible, make prepayments as soon as you have extra cash and pay off the loan before it matures. However, it seems sensible to apply for a longer term at first. The lower home loan rates are a bonus.
5) Prepare all of your documentation in advance:
There are many different types of documents we might ask you to provide, or documents we might need to see, when you apply for a home loan. The most frequent cause of delayed loan approvals or rejected applications is a lack of required paperwork. Therefore, make sure you have the following papers on hand.
- Some of the things we could ask for: proof of identity, income and asset documents, credit cards and much more.
- If you’re a salaried employee, you’ll need at least three years’ worth of salary statements, and IT returns.
- If you’re self-employed, you’ll have to deal with revenue reports, GST filings, and tax returns, among other things.
6) Resolve any concerns about lending:
If you have a concern with a lender, you should address it before applying for a mortgage. If you’re contesting a credit card payment with your card provider, for example, make sure it is resolved before applying for a house loan. It’s best if your credit history is as clean as possible.
When you perform the measures outlined above to enhance your prospects of qualifying for a house loan, you will be able to swiftly qualify for a more considerable loan amount, a more extended repayment period, and better terms of service.
Begin by boosting your credit scores and, if necessary, correcting any inaccuracies. Continue to reduce your previous loans and aggressively save for a down payment on your dream house.