Worried about your home loan eligibility? Here’s how you can ace it!

7 MinsOct 29, 2020

You have been scouting for your dream home and have finally found it. It meets all your requirements in terms of cost, location, size, etc. Since you have been saving diligently you have enough funds for the downpayment. Now all that is left is to apply for a home loan and the house is yours!

But before you do so, you need to know why your application may be rejected and what you could do to ensure that it is approved without any hassle. Let us see what these measures are. 

home loan

Build a good credit score: Building a good credit score and credit history takes between 24-36 months. You need to have a CIBIL score of over 750 if you want to avail of a home loan at a decent interest rate. Here are some ways you can improve your score:

1. Never default on your credit card or existing loans.

2. Don’t max out your credit card every month.

3. Always pay your EMIs for loans and credit card dues by the due date.

4. Do not pay only the minimum amount due on credit cards.

5. Do not have too many loans at one time. 

Clear off existing loans: So you haven’t defaulted on any existing loans. Great! However, to further boost the loan approval process, as far as possible, clear other existing loans. Say you had purchased a smartphone on EMI a year ago. Try to pre-pay and close that loan. This not only strengthens your credit score but also with one less EMI to pay, you may have a higher chance of getting a higher loan amount approved. If you have multiple personal loans, try and clear at least one, if it is not possible to clear them all.

Take a joint loan: A husband and wife jointly applying for a home loan generally mean higher chances of the loan being approved. Lenders are usually more comfortable with two people repaying the loan as it means the family has two incomes and is in good financial standing. You could also jointly apply for a home loan with a sibling or a parent. A joint income also means that you could get a higher amount as your repayment capacity is higher. 

[Also Read: Buying property? Consider a joint home loan]

Apply for a longer tenure: When you apply for a longer-term home loan, lenders might be more willing to lend. The pressure of monthly EMIs comes down significantly. If possible, you can always make pre-payments as and when you get surplus funds and close the loan before maturity. But initially, it makes sense to apply for a longer tenure. 

Keep all your documents ready:  Lack of requisite documents is the most common reason for loan approvals getting delayed or applications rejected. Hence ensure that you have the following documents ready. 

a. If you are salaried, then - Salary statement and IT returns for at least three years. 

b. If you are self-employed, then revenue statements, GST filings, IT returns, among others.

c. Proof of Identities such as Voter ID or Aadhaar

d. Credit score details

Check the developer’s credentials: Real estate is a tricky business. You want to be sure that you are looking at a property whose developer has a good track record. Check the following: 

1. Completed projects and whether deadlines were met

2. Ongoing projects and if the builder is on schedule to complete them

3. Any outstanding cases against the builder for lack of delivery

4. The financial lenders associated with the developer

5. It doesn’t matter if it is a flat under construction, a resale flat or a new property, ensure that the title deed is clear and the occupation certificate is in place.

6. Permissions from the municipality when it comes to electricity and water connections.

7. Very often, banks have tie-ups with developers. Check with your lender for the same. A loan application for buying a flat in a project where there is a tie-up with the lender will speed up the approval process.

Resolve any pending issues: If you have an ongoing issue with any lender, resolve it before you apply for a home loan. For example: If you are disputing a credit card charge with your credit card company, make sure it is resolved before you apply for a home loan. Your credit record should be as spotless as possible. 

Axis Bank offers an array of affordable and flexible home loans designed to suit the requirements of all home buyers. To explore Axis Bank's wide range of products for the most competitive Home Loan interest rates, extended loan tenures and other benefits like EMIs waivers click here.

Use Axis Bank’s Home Loan calculator that is based on your requirements, such as tenure, loan amount and interest rates to give you an estimate of your EMI.

Disclaimer: The Source, a Mumbai-based content creation, and curation firm have authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.