Home loan applications and experiences are like Indian passport services. The process is extremely smooth for some people and not so smooth for the rest. But what are the factors that bring around these different encounters? You need to be mindful of the fact that exactly like in the case of a passport application, your eligibility for a home loan also can be enhanced with certain pre-meditated precautions. There are logical and well-defined criteria basis which your eligibility is decided and a loan is sanctioned. Thus, while you have your eyes set on your dream house, that is pretty much only the starting point of it all. What succeeds this is the actual test, i.e., your home loan application.
And since we would never want you to miss on your dream house, here are a few suggestions to improve on your eligibility-
What’s your credit score?
A credit score is a 3-digit number that represents your debt-paying capacity basis your historical dealings. There are agencies like CIBIL who own all your past data and basis of factors like how many loans were accumulated, how regularly were you paying them back or if you ever faltered; they calculate these scores for the consumption of further lenders. Things from as small as your credit card monthly payment to any business/home loans in the past are all accounted for while working this score out. Going by popularly set standards, any score above or equal to 750 is said to be favourable when evaluating your profile for a home loan. But each bank/NBFC might have its own criterion and there is no one standard rule.
What is advisable here is to maintain a healthy debt to income ratio and also to be paying off your debts religiously without delays. Check your CIBIL score here.
Are you considering a resale flat?
Hypothetically, if you are buying a resale flat for 60 Lakhs and want a loan for 45 Lakhs, there is a good chance the bank might not agree with you. This happens purely because they would price the flat as per their own valuation and might conclude that the flat is worth only 50 Lakh after all. This, as you shall see will almost never be the case with a new flat being bought directly from the developer. Even though banks might have separate offers for resale houses, you might face some issues like them asking for higher down payments or granting shorter loan tenures. In addition, the piles of documents that you’d be required to produce might not come in very easy from the current owner; unlike how they are almost gifted to you by the developer when buying a new house.
All this seems to be a bit too much trouble for buying a house that has been pre-owned and might have issues that you shall only discover later. Hence, it is always advisable to buy a new house instead and make your loan process simpler.
Did you consider co-applicants?
It is not very well known but having co-applicants increases your loan eligibility considerably. Mostly because a new income is then added to the application which then increases your repayment capacity. This also helps when you are past your 40s/50s and the tenure is shortening because the number of salaried years is reducing. The co-applicant can be your children (earning) or your spouse. In fact, co-applying for a house with your wife might get you some added advantages like lower interest rates and stamp duties, apart from increasing your eligibility.
We sincerely hope that you buy your dream house and do it with no glitches on the way. However, while looking, we’d suggest that you go for RERA registered projects and buy unoccupied flats from the developer rather than opting for resale. Your dream house deserves to be brand new!