Whether you are looking to buy a new house or planning to build one from scratch, it requires a massive investment. With real estate prices soaring higher than ever, Home Loans have become an integral part of purchasing a property.
Nowadays, housing finance companies make Home Loans readily available, but the borrower has to meet certain criteria for approval. Even a slight mistake can lead to loan rejection. It wastes time, discourages the borrower, and hurts their credibility in the long run.
Here are a few tips to get instant approval when you apply for Home Loan.
1. Improve Your Credit Score Before Applying
A good credit score above 611 works in the applicant’s favor when they apply for a Home Loan. It helps secure the best loan offers from multiple lending institutions at the lowest interest rates. While planning to borrow a Home Loan in the coming future, start working on the credit score using the following tips:
●Check your credit score to get an idea of your current standing.
●Never default on loan EMIs and credit card bills – repay them in full each time.
●Avoid maxing out the credit cards to keep the credit utilisation rate below 30%.
●Pay off ongoing loans to reduce the DTI ratio and increase eligibility.
However, remember, one cannot build a good credit score overnight. It takes between 3 and 24 months to boost the credit score and reach the desired levels.
2. Ensure an Error-Free Credit Report
Besides checking the credit score, also scrutinize the credit report and ensure it is free from errors, wrong entries, or discrepancies. Mistakes in the credit report are common due to misreporting by loan companies. So, get the latest credit report from a credit bureau and study it carefully to check each piece of information. If the credit report has errors, report them to the credit bureau and request rectification. Besides checking the credit score, housing loan companies evaluate the credit report before sanctioning a loan application. Hence, keeping it free from mistakes is essential.
3. Pay a Bigger Down Payment
Most housing loan companies do not fund 100% of the property’s price. Generally, they offer 80-90% of the property’s value. The borrowers must contribute the remaining amount out of their pockets as a down payment. If a borrower makes a bigger down payment and borrows a lower loan amount, the loan providers build trust in them and take their requirements seriously. Hence, they speed up the loan approval process to give faster disbursal. A Home Loan calculator helps calculate the eligible loan amount, according to which the borrowers can arrange an adequate down payment.
4. Co-Apply for a Joint Loan
Joint Home Loan applications have higher chances of faster approval. That means when the borrowers apply for Home Loan jointly with an earning spouse or another earning family member, their application is likelier to get approved quickly. Lenders usually prefer joint loan applications, as they have two incomes and credit scores, hence higher chances of repayment.
Another advantage of joint loan applications is that they make the co-borrowers eligible for a bigger loan sanction, as the collective repayment capacity of both borrowers is higher than a single applicant. Including a female co-borrower in the application helps you enjoy discounted interest rates and higher tax benefits.
Other than these, opting for a longer repayment tenure, keeping the necessary documents ready, and reducing the DTI ratio are other ways to boost the Home Loan application and approval speed. Apart from being a large financial transaction, purchasing a property is also an emotional investment. It gives them a sense of stability, pride, and security. So, put your best foot forward by following these smart tips and getting instant approval.
