Purchasing a property to call home is one of life’s most satisfying experiences. However, at the same time, it is a stressful endeavour as well. The first challenge is to find a home that best suits the homebuyer’s family requirements and expectations. The next big thing is to arrange finance for its purchase.
Many people opt to take a home loan to fund their home purchase. However, getting loan approval is not as easy as it seems to be. Although many NBFCs make housing loans easily accessible these days, the borrower must fulfil many conditions and requirements. Considering that, we have come up with these top five practical methods to get a loan approved instantly.
1. Maintain a High Credit Rating
The applicant’s credit score is one of the essential parameters with regards to getting a loan approval quicker. Lenders largely rely on an individual’s credit rating to get an idea of their repayment history and overall credit behaviour. That is why the credit score is crucial in most lenders’ eligibility conditions.
In the event the credit score is low, one may find several ways to boost the score and improve their home loan eligibility. Paying bills and EMIs on schedule, keeping debt-to-income and credit utilisation rates low, and diversifying the credit portfolio are some sure shot ways to maintain a high credit rating. Besides fast loan approval, those with a credit score of 750 or above qualify for a higher loan amount at lower interest rates.
2. Make a Bigger Down Payment
Most housing loan lenders fund 70-90% of the property’s price with a loan, and the borrower has to pay the remaining amount from their savings. The amount they pay to initiate the loan is called a down payment. Waiting for some time and saving money for a bigger down payment will improve an applicant’s loan eligibility and attract faster approval. People who do not plan well and save up for a down payment decrease their loan eligibility and end up exhausting their savings.
Making a bigger down payment also means the applicant has to borrow a smaller amount to fund their property purchase. It projects the applicant as a low-risk borrower, thereby improving their chances of faster approval. Besides, a considerable down payment keeps the borrower’s financial burden low and makes EMIs more manageable.
3. Reduce the Debt-to-Income Ratio
Lenders do not prefer borrowers who are already indebted heavily. Such applicants have high financial obligations to meet each month and have a higher chance of missing EMI payments and defaulting on the loan. To check this, lenders calculate each applicant’s debt-to-income ratio, the percentage of monthly income they spend towards their other financial obligations.
Reducing the DTI ratio attracts fast approval and keeps the EMI payments easier for the borrower. Besides, paying off existing loans and EMIs improves borrowers’ repayment capacity and helps them plan the EMI payments more responsibly and conveniently.
4. Add a Co-Applicant
Sometimes, a single borrower’s income and credit rating are insufficient to get loan approval. Such borrowers can improve their loan eligibility and get faster approval by utilising the lender’s co-applicant feature. With this facility, a borrower can add a co-applicant to their home loan application, bringing their income and credit score to the application.
While applying for a loan with a co-applicant, both the applicants are responsible for paying off the loan. So, even if one borrower fails to repay the loan amount, the lender has an assurance that the other borrower will continue paying the EMIs. Consequently, lenders perceive co-applicants as lower-risk borrowers, approving their loans faster and easier than single loan applicants.
5. Keep Documents Ready
Before applying for a home loan, preparing the documents necessary for the application is essential. Exercise extra caution while filling out the application form to ensure no errors or discrepancies. Read the fine prints carefully to check any hidden charges.
Several documents are required to finalise the loan application, including the applicant’s identity proof, address proof, income proof, bank statements, etc. Check the required documents and keep them ready to accelerate the loan process and get faster approval.
The tips above will improve an applicant’s eligibility and assure instant home loan approval with the best terms and conditions. The key is maintaining a high credit score, reducing the DTI ratio, and saving for a bigger down payment. Adding a co-applicant further improves the chances by adding their loan eligibility factors like income and credit score.
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