Buying a home is one of the biggest expenditures in your life. If you’ve considered financing the purchase, you have likely invested time in planning and exploring the market for the best loan available.
Home loans may extend for a very long period of time. Due to this, lenders go through a disciplined and highly organised approval process to grant you a loan. This process may go on for some time since the lender needs to assess your creditworthiness. Here are 5 ways to improve getting your home loan application approved without any hiccups.
1. Keep a check on your credit score
A lender may reject your application if you have a bad credit score. This is a very common mistake made by applicants. If not frequently, you should keep a check on your credit score periodically and try to maintain it at an acceptable level. Your credit score needs to be above 700 to make a solid application for a home loan. Apart from the credit score, unfavourable credit information such as missed payments, frequent delays in payments, etc. also raise a red flag during the approval process and should be avoided.
2. Maintain your debt-to-income ratio
If you spend most of your income on the repayment of other small loans and debts, you might deteriorate your credibility and lower your chances of getting a loan. Maintaining a healthy debt-to-income ratio will help the lender approve your application easily.
3. Avoid new debts and clear unpaid dues
As discussed above, your debt-to-income ratio can worsen your chances of getting approved for a home loan; you should steer clear of any new debt. Moreover, if you have any existing debts or unpaid dues, try to clear them so the ratio is maintained. Another pro-tip to achieve a healthy ratio is to avoid major purchases until approval such as a car, white goods, etc.
4. Have a stable job
Generally, lenders prefer applicants with a stable employment history. Therefore, it’s better to have stability in your professional life while going through the home-buying process. Switching jobs during this process might lead to a delay in the approval or worse, cancellation of your application.
5. Be familiar with the process
Research is the most important step in ensuring that you get the most reasonable home loan interest rates available. To make this happen, it is important that you thoroughly research and evaluate all the options available in the market to find the best lender. To work out an accurate calculation, use the home loan EMI calculator provided on various platforms online. To avoid any further hindrances, you should be aware of the necessary documentation required such as No Objection Certificate (NOC), Identity Proof, Bank Statement, etc.