Currently, owning a home or property is a big deal as it acts as an important asset that helps you to reap numerous financial benefits. Whether you want to buy a home from an investment point of view or just require a new home to live in, banks or NBFCs provide you with good home loan offers that are lucrative and beneficial. A home loan is an excellent option to fund a home in case you are short of funds or do not want to liquidate your savings or investments. With the assistance of easy home loan EMIs and the choice to choose repayment tenure based on your convenience, banks and NBFCs help at making your dream of purchasing a property or home a reality. However, before starting with the application for a home loan, ensure to know the important factors that home loan lenders like ICICI or others consider for deciding your ICICI home loan eligibility or home loan eligibility for other lenders.
Lenders like ICICI bank and others evaluate your ICICI home loan eligibility or home loan eligibility in general by assessing your credit score, job profile, monthly income, employer’s profile, EMI affordability etc. Failure to fulfil the ICICI home loan eligibility standards or home loan eligibility standards for other lenders can lead to application rejection.
Here, we will discuss the top three important factors that you can consider to boost your ICICI home loan eligibility or home loan eligibility for other lenders:
Add in a co-applicant
Home loan applicants with low home loan eligibility due to poor credit score, risky job profile or inadequate income etc., can increase their ICICI home loan eligibilityor home loan eligibility for other lenders by adding a co-applicant to the loan. As a co-applicant is equally responsible for repaying EMIs, adding, him/she reduces the credit risk of lenders and enhances the home loan approval chances.
Adding a co-applicant not just increases the applicant’s EMI affordability but also helps at getting a higher loan amount on the home loan. However, ensure that any default or delay on home loan repayment of EMI can reduce the credit score but not only the primary home loan borrower but also of the co-borrower. Hence, as a primary home loan borrower, make sure that you repay your home loan EMIs on time and in full because any missed repayment will not just affect you but also your co-borrower.
Make sure to form a higher down payment contribution for a home loan. According to RBI guidelines, lenders or NBFCs are allowed to finance up to 75 to 90 per cent of the home value as a home loan based on the loan amount. The remaining home loan amount is required to be repaid by the applicant’s own resources. The final loan proportion gets determined by the lender based on their credit risk evaluation once they receive the home loan application. Note that contributing a higher down payment from your own funds reduces the credit risk for lenders, which actually increases your ICICI home loan eligibility or home loan eligibility for other lenders. Doing this also reduces your whole home loan interest cost. However, note that there are some home loan applicants that end up contributing more down payment by compromising on their crucial investments for their financial goals or by liquidating their emergency fund. This must be avoided because doing this propels you to choose higher interest cost home loans in events if you witness unexpected financial emergencies or want funds to fulfil your financial goals.
Evaluate your EMI affordability for a home loan before submitting your application
Home loan lenders like ICICI bank require the applicant’s EMI, including their new home loan EMI and another existing home loan EMI, to remain under 60 % of the applicant’s monthly income. Those exceeding this fixed limit have lower home loan approval chances. Those wanting to increase their approval chances for a home loan should keep their monthly loan repayment obligations under 60 % of their monthly income. For those with a higher loan repayment obligation surpassing the set, a limit can bring the limit down by prepaying or foreclosing their existing loan debts. Those with no surplus money to repay their existing debts can choose higher home loan repayment tenures.
Note all the home loan EMIs are based on factors such as interest rate, loan amount, repayment tenure etc. While higher home loan EMI can lead to shorter repayment tenure and lower interest cost, a lower home loan EMI results in longer tenure and higher interest cost. Thus, home loan applicants should take up the help of an ICICI home loan EMI calculator or other home loan calculator to calculate their optimum EMI based upon their capacity to repay. These applicants should also factor in their monthly expenses, monthly contribution towards their goals, rent, wards’ fees, insurance premiums etc., to calculate their optimum EMI. Submitting an application for a home loan after knowing about your optimum home loan EMI reduces your home loan EMI default chances that might happen to owe to tight or strict repayment schedules.
Ensure to maintain a good credit score
A credit score is an essential factor that lenders consider when assessing the applicant’s creditworthiness. Those with a good credit score of 750 and above are often thought to be financially sound and hence have reduced credit risk. Moreover, such applicants with a higher credit score carry enhanced chances of availing of home loan approval than those with a lower credit score of less than 750 because they are thought to be financially unsound and hold higher credit default risk. Thus, if you want to avail of a home loan, make sure to check your credit report regularly. Opting for this route allows those with a lower credit score of less than 750 to undertake the needed steps to improve their score first before applying for a home loan. New to credit, individuals can form their credit score by making transactions through credit cards and repaying their full dues on time. On reaching a credit score of 750 and above, application submission for a home loan can be done.
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