You’ve spent months searching for a home for your family, visiting property website after property website and attending several open houses. Your dream home is finally within reach! Greetings! You must have your house loan authorized before moving into your ideal home.
Build your credit before applying.
If you have a solid credit score and history, applying for a house loan may assist. You are more likely to get accepted if you have a credit score of 750 or better. It enables you to get several home loan offers from the finest lenders at the greatest prices.
But keep in mind that improving your score takes time. Based on your present score, it might take anywhere from 3 to 24 months to boost your score. So, if you want to get a house loan next year, you need to start improving your credit score. You can raise your credit score by using the advice below:
- Your credit report can be obtained for free. This demonstrates where you are and what you need to accomplish.
- Never fail to make an EMI or credit card payment. Please make certain that they are paid on time and in full.
- Couldn’t you use your credit card up to the limit? Try to keep the use ratio under 30%.
- Keep your borrowings to a minimum. Pay a few smaller debts before applying for a large house loan.
Fix any mistakes on your credit report and get it in order.
It is essential to review your credit health report and credit score. Credit bureaus create your credit report, which may include errors if lenders submit incorrect information. Get a copy of your most current credit report and carefully review it to discover if any information is missing.
If there are errors on your credit report, you should notify the appropriate credit agency and get them corrected. Before accepting your home loan application, lenders examine your credit score and credit record. The importance of ensuring no errors can’t be overstated.
Apply for a home loan together
With someone else, your chances of securing a house loan are better. When applying for a house loan, the more earning family members you have, the more likely the loan will be accepted. Lenders often favor combined house loans since there are two salaries, which increases the likelihood that the loan will be repaid.
Because of the enhanced repayment potential, a shared home loan boosts your eligibility for a bigger loan. A female co-applicant may also assist you in receiving lower interest rates. Most lenders provide lower interest rates on house loans to women.
Choose a longer term.
Using a longer term for your home loan, your monthly EMIs fall, reducing the load on your monthly budget. Lenders often prefer home loan applications with a longer term and lower EMI to reduce the risk of monthly EMI delinquency.
Have all the paperwork ready to go.
One of the biggest reasons for home loan rejections is a lack of required documents. Your home loan may be delayed or even denied if you do not have the necessary documentation. So, visit the lender’s website and make sure you have all your papers available.
The typical paperwork needed for most house loans is listed below:
- The list of documentation is short and simple for salaried employees. It contains recent evidence of identity, proof of residence, pay stubs, and IT statements.
- Documents for yourself and your firm are required for self-employed individuals. This comprises evidence of identification, address, proof of ownership, GST statements, IT returns, revenue statements, and so on.
Fix your FOIR
Aside from the credit score, the Fixed Obligation to Income Ratio (FOIR) is an essential factor that lenders use when reviewing a home loan application. The FOIR is the difference between your monthly net income and loan payments.
Assume, for example, that you earn Rs. 1 lakh per month and pay Rs. 50,000 in EMIs on multiple loans. Then your FOIR ratio is 50. A FOIR of 50 or more will reduce your chances of securing a house loan. So, before applying for a house loan, attempt to pay off at least two previous debts, such as a personal loan or a two-wheeler loan, to reduce the FOIR ratio.
Choose a well-known developer.
Because real estate is difficult, lenders prefer to engage with borrowers who have relationships with respected property developers. If you choose a well-known developer, the project will likely be completed on schedule without legal issues.
Furthermore, most lenders collaborate with the greatest real estate developers. If you pick a lender-approved property developer, you will most likely acquire the house loan swiftly and easily.
Get a pre-approved loan.
Your home loan application is more likely to be accepted quickly if it has already been preapproved. Pre-approved home loans are offered to you depending on your ability to repay. The lender’s review of your existing financial records determines the house loan amount. After completing the proper documentation, you may acquire a pre-approved home loan within one or two days.
Decide to Make a Higher Down Payment
Property loans may not usually cover the whole cost of a home. Typically, home loans are only granted for 80% to 90% of the property’s worth. The remainder will have to come from your own money.
Paying a greater down payment than is necessary develops confidence with the lender, which expedites the house loan application process.
Choose a lender that you get along well with.
You may speed up the approval process with a lender acquainted with your financial circumstances, such as the bank where you hold your pay account. Before applying for a house loan, resolve any issues, such as a disputed credit card bill. You’ll have a better connection with the lender this way, and they’ll be more likely to accept your application promptly.