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You need to remember certain things when you apply for a home loan to avoid your application from getting rejected. For instance, you need to submit all the required genuine documents. Besides that, here are the other things to keep in mind to avoid a loan rejection.
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Keep a High Credit Score
A lender checks your credit score to determine your creditworthiness before offering you a home loan. A borrower with a credit score of 750 or higher usually qualifies for a loan.
If you have a lower score, you can boost it in these ways:
- Pay existing loan EMIs and credit card bills regularly on time.
- Maintain a credit utilisation ratio within 30% on your credit cards.
- Keep your credit report free from errors and report them, if any.
A high credit score can often help you get the most competitive home loan interest rates.
Avoid Applying to Loans from Multiple Lenders
When you submit a loan application, the lender requests the credit bureau to send your credit report for evaluation of your creditworthiness. Such a request is called a hard enquiry that gets included in the credit report and reduces your score by some points. Multiple hard enquiries within a short span can significantly affect your credit score.
Moreover, if you apply for too many home loans within a short period, you may meet with debt accumulation. If you can’t clear the debt, it can impact your credit score again and reduce your chances of getting new loans or low home loan interest rates.
Therefore, apply at the best bank for housing loans that offer multiple benefits like:
- Custom-made loans with minimal requirement for documentation
- Online applications for loans up to ₹5 crores and tenure up to 30 years
- Higher eligibility for self-employed and salaried customers
- 100% top-up available at the same rate as home loan balance transfer
Meet the Eligibility Criteria
You must meet home loan eligibility to qualify for the loan. The usual eligibility criteria are as follows:
For Self-Employed Individuals
- Resident Indians
- Age between 23 and 70 years
- Must run a business for at least 4 years
- Should earn at least ₹1.5 lakh per year
- Must choose tenure between 12 and 300 months
For Salaried Individuals:
- Resident and non-resident Indians
- Age between 21 and 60 years
- Must run a business for at least 3 years
- Should earn at least ₹1 lakh per year
- Must choose tenure between 12 and 360 months
You can use a home loan eligibility calculator to select a suitable loan amount.
Choose Tenure Based on Your Repayment Capacity
A lender usually lends to a borrower whose obligations for loan repayment, including EMIs are within 50% of the monthly income. Consider these obligations and other financial goals that involve monthly expenditure. Then subtract the total of all monthly obligations from your monthly income to estimate your repayment capacity. Use a home loan eligibility calculator to calculate a suitable tenure and an affordable EMI amount.
Once you get the loan, ensure to pay the EMIs regularly to qualify for future home loans at industry-best interest rates.
