9 Steps to Improve Your Home Loan Eligibility | ICICI Bank
9 Steps to Improve Your Home Loan Eligibility
Buying a home is a big financial decision and even though a lot of people save for it, arranging all the money in one go can be quite challenging, especially if you factor in today’s skyrocketing property prices. In that regard, opting for a Home Loan is a smart move.
However, lending institutions have certain criteria that an applicant has to meet. In some cases, many potential borrowers may find it challenging to get approval. If you’re looking to apply for a loan, it is important for you to be aware of eligibility criteria. In case you fall short in terms of eligibility, here are some tips that may improve your chances.
How you can improve your Home Loan eligibility
Here are a few effective ways to do this:
1. Maintain a good credit score
Your credit score is one of the major factors in determining your eligibility for a Home Loan. A good score reflects your creditworthiness and lenders use it to assess your repayment capacity. It is essential you maintain a good credit score by paying your bills on time, not defaulting on loans and keeping your credit utilisation ratio low.
2. Increase your income
Any financial institution is bound to consider your income when assessing your eligibility for a loan. Higher income naturally means higher repayment capacity, which makes you a more viable borrower.
If you are planning to apply for a Home Loan, you must see whether your current income will get you a good deal. If not, try and wait a while, consider increasing your income by getting a higher-paying job, taking up freelance work or starting a side business.
3. Reduce your debt
Every credible lender will look at your debt-to-income (DTI) ratio when assessing your Home Loan eligibility. This ratio basically weighs the amount of debt you have against what you earn. If you have a high DTI ratio, it indicates that you may well face difficulty repaying the loan. This is why it is essential to reduce your debt by paying off Credit Card bills, Personal Loans and other debts.
4. Save for a down payment
A down payment is the amount of money you will pay upfront when buying a house. Lenders prefer borrowers who can make a sizeable down payment as it brings down the amount of loan they need along with the risk of default. Saving enough to make a considerable down payment can improve your eligibility.
5. Choose a longer loan tenure
The loan tenure is the duration of the loan that influences almost all other facets of your Home Loan. If you choose a longer loan tenure, your EMI will be lower which can improve your home loan eligibility. However, keep in mind that a longer loan tenure does increase the total interest you’ll have to pay on the loan. So, choose a tenure that suits your finances.
6. Opt for a lower loan-to-value ratio
Loan-to-value (LTV) ratio is the percentage of the property's value that you can borrow as a Home Loan. A lower LTV ratio brings down the amount of money you take on credit and improves your eligibility.
7. Maintain a stable employment record
All creditors prefer borrowers who have been employed or running business for a certain number of years. A stable employment record is reflective of your ability to repay the loan over the repayment period.
8. Clear your existing loans
If you have any other existing loans, let’s say a Personal Loan or a Car Loan, do clear them before applying for a Home Loan. Clearing your existing debt brings down your DTI ratio and improves your eligibility for getting a good deal on a Home Loan.
9. Avoid late payments
Missing payments on your Credit Cards or loans can have a negative impact on your credit score which hurts your eligibility for a Home Loan. Make all your payments and clear your bills on time.
Eligibility and features of ICICI Bank Home Loans
At ICICI Bank we offer Home Loans for buying a new property or constructing a house. Here is an overview of the eligibility criteria and features of ICICI Bank Home Loans:
• You should be an Indian resident or a Non-Resident Indian (NRI).
• You must be between 21 and 65 years of age
• You should have a regular and stable source of income.
Features of ICICI Bank Home Loans:
• Loan amount: You can get a Home Loan for whatever amount you need provided you meet all requirements.
• Loan tenure: The tenure of the loan can be up to 30 years, subject to the prospective borrower's age and repayment capacity. The tenure can go higher as well.
• Interest rates: Home Loan interest rates at ICICI Bank are very attractive.
• Other features: ICICI Bank also offers features like balance transfer of existing home loans, top-up loans and EMI calculators to help borrowers plan their repayment.
In addition to the above, we also have specific eligibility criteria for different types of Home Loans such as the purchase of a plot of land or for the construction of a house on a plot of land.
The information provided here is just a concise overview and there may be additional terms and conditions that apply. It is always best to check with our representatives directly or consult with a financial advisor to understand the full details and implications of taking a Home Loan from ICICI Bank.
Improving your Home Loan eligibility is something of a prerequisite when it comes to fulfilling your dream of owning a house without overburdening your finances. Check your credit score, improve your DTI ratio, save for a down payment, choose a co-applicant, opt for a longer loan tenure, lower LTV ratio and maintain a stable employment record to get a Home Loan that is both convenient and affordable in the long run.
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