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Who doesn’t want to live in a home of their dreams? Today, as people apply for home loans online and products from home loan providers become simpler to avail than ever, these dreams can become a reality with a convenient application process. However, despite these benefits, a home loan applicant must ensure that their chances of success with the process are as high as possible. To that end, here are 3 simple steps that are certain to improve your chances of landing a home loan.
There are a wide variety of home loan providers in the market with different plans and features. However, one thing remains the same for all lenders across the board – they will always take a good, hard look at the credit report of every individual who applies for the housing loan. Since home loans are typically large amounts and carry enormous significance, lenders must ensure that these amounts will be repaid punctually, regularly and in good time by the applicant. For this purpose, they need to assess his or her creditworthiness and this purpose is best served through a credit report.
There are a number of credit bureaus that collect information about an individual’s credit history and accumulate and present it via credit reports to prospective lenders. However, in India, CIBIL is typically the credit bureau of choice for many individuals and lenders.
As someone looking to apply for a home loan, make sure that you check your CIBIL report on a regular basis to ensure that all the details are accurate and updated. Regularly checking your credit report before applying for a home loan online ensures that there is no time wasted on updating details and fixing mistakes during the process. It also minimises the chance of having your application rejected by a housing loan company on the basis of information that is old and irrelevant.
As mentioned above, your credit report has an important part to play when home loan providers seek to analyze your creditworthiness. The credit report contains a variety of data points about your creditworthiness, but the one that you should most focus on, as a home loan applicant, is your credit score. Credit scores in India can range from 300 to 900 and housing loan companies have a minimum threshold that an applicant must meet to even qualify for a loan.
There are various methods by which you can make sure that your credit score is maintained or improved to boost your chances of landing a home loan. You can work towards eliminating your credit card balances, increase your credit limit and ensure that your EMIs are regularly paid and that there are no delays in bill or debt payments. For the purpose of applying for a home loan online, a credit score in the range of 750 or above is an ideal score to keep, so make sure your credit score is as high as possible.
As lenders analyze the repayment potential of a borrower, they review various factors. While credit reports and credit scores offer valuable insight in this regard, there is yet another factor that is often taken into account. This is the individual’s debt to income ratio, which is an indicator of how your monthly debt compares against your monthly gross income.
If the ratio is high, it is skewed towards debt expenses which means that you will have a harder time managing your home loan payments within your income. If the ratio is low, it means that despite your debt, your income allows you the capacity to make additional debt payments.
Therefore, if you are applying for home loan online or otherwise, make sure that your income to debt ratio is as low as possible. A favorable income to debt ratio of 36% or lower goes a long way in inspiring confidence in housing loan companies and gives your application a much better chance of approval. You can lower your debt to income ratio by paying off loans ahead of schedule, seeking additional income, postponing big purchases to use less credit and more.
A home loan is usually associated with acquiring a new home and marks a time for new beginnings. Keeping these simple steps in mind ensures that when it comes to applying for a home loan online, you are putting the best foot forward and improving your chances of securing the home loan you desire.
But apart from following these steps, it is also essential that you have the right home loan provider on your side before you venture into buying the home of your dreams. To that end, the home loans from Hero Housing Finance Limited go a long way in making the process simpler by offering easy and hassle free documentation and application processing. With Hero Housing Loans, you can make the most of their integrated network and centralized processing that easily allows you to take home loans from anywhere.