For most aspiring homeowners, taking a home loan is necessary to meet the costs of buying a house. However, as home loans involve large sums of money, their applications are approved only after a lot of consideration. It ensures that there are no bad debts and the borrower repays the loan amount on time.
However, a simple mistake or a small miss can result in a home loan application rejection. A home loan rejection can affect the the borrower's credit score and will raise a red flag for other lenders.
Follow these 5 effective tips to get your home loan approved instantly:
Know your financial condition
Take a close look at whether you have the finances to pay back the loan comfortably. One of the main requirements of availing a housing loan is to clear your EMIs on time. In addition, many lenders will have a minimum salary requirement, which varies from city to city.
For example, if you’re live in Delhi or Mumbai, we have a minimum salary requirement of Rs. 50,000 pm. But, if you are living in Pune or Bangalore, the salary requirement is Rs. 45,000 pm.
Knowing your repayment capacity is extremely crucial to making sure your application gets approved.
Additional Read: An easy guide to increasing your existing home loan amount
Pay a higher down payment
Once you know the cost of the property you wish to purchase, try to pay at least 20% of that amount as a down payment. The lesser less money you borrow, the lesser less money you need to pay back. 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 home loan eligibility. Most lenders will check your CIBIL Score before approving the home loan. Your CIBIL Score tells how good you are with your investments, your previous loans due, and how much new loan you can repay.
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 unpaid, clear off all your outstanding debt. Submitting multiple applications for home loans can affect your credit score, if they get rejected. Pick your lender carefully and make sure you only submit an application if you are sure of it being approved.
Additional Read: Your guide to getting a better home loan interest rate
Utilise the co-applicant feature
If you can, try to get your parent or spouse to be a co-applicant. It can significantly raise the chances of getting your application approved, especially if your co-applicant is also earning a sizeable income. In addition, banks allow you to club the net income of your parent or spouse while applying for a loan. It 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.
Pay attention to the application form and documents
One of the worst reasons for having a home loan application rejected is an incorrect application form. Be extremely careful while filling up the form. Being thorough with the form will also ensure that there are no hidden clauses that could catch you off-guard later. Also, avoid making mistakes with your account numbers and salary details.
Tips to improve home loan eligibility:
Pay attention to errors on your credit report
Any mistake or discrepancy in your credit report can restrict your home loan application to proceed further. Hence, it is advisable to check your credit report beforehand and rectify those errors before you apply.
Be prompt in responding to your lender
Make sure to respond to requests from your lender at the earliest. Not being prompt will further delay the loan disbursal and may even influence the financial institution to reject your application. Application rejection can be even more problematic if you have already made an advance payment towards purchasing your new home.
Conclusion
During the home loan application process, you must disclose all information that is relevant to your application. Be honest about the details you are submitting to avoid a Home Loan rejection. If you are unsure about your eligibility or EMIs, you can use home loan eligibility Calculator to avoid home loan rejections.
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