It can be disheartening to know that your home loan application has been rejected. It could be due to incomplete documentation, poor eligibility or any other reason you might not be aware of. While accepting or rejecting your loan application is entirely under the discretion of the lender, there are certain things you can do to improve the approval chances.
Here are four things you can do to increase the chances of your loan approval.
- Take a joint loan
Lenders process your loan based on your home loan eligibility and income. If your income level does not meet their criterion, they can reject the loan. To avoid that, you can take a joint loan. Lenders add all the co-applicants’ income to determine your eligibility. Having a co-applicant with a good credit history and high income can automatically enhance your eligibility and thus, the chances of your loan approval. You can take a joint home loan with your parents, spouse or siblings. However, ensure to check the rules of availing a joint loan with your lender before proceeding. Also, it would help to club all your income sources like bonus income, rental or interest income if any, while filling the application form.
- Improve your credit score
Your credit score is a crucial eligibility criterion. Lenders often reject a home loan application if you have a poor credit score. Therefore, it is best to check your credit score before you apply for a home loan. Ensure that you have a credit score of 700 and above. If you have a score lower than this, take steps to improve the score before applying. You can improve your credit score by repaying credit card dues and bills on time, and maintaining a credit utilisation ratio within 30%. Also, avoid applying for a loan with multiple lenders at the same time as it affects your score adversely.
- Choose a longer tenure
Experts opine that opting for a longer tenure can help increase the chances of home loan approval. With a longer tenure, your EMI increases, giving you ample time to repay the loan. Before availing a home loan, use a home loan EMI calculator to determine the ideal tenure you should opt for, so you can comfortably repay the loan. However, you must note that a longer tenure would increase the interest outgo and thus your total cost of borrowing. For that, you can partly repay or foreclose the loan.
- Pay off all your debts
To enhance the chances of loan approval, you must improve your debt to income ratio. You can do so by prepaying or foreclosing all the existing loans you are servicing. You can also consolidate all your debts into one loan to avoid missing out on EMIs. Once you clear your loan, ensure to take a No Dues certificate, certifying you have repaid the loan.
Before applying for a loan, you must use an eligibility calculator to check if you are eligible for the loan. Proceed with the application only when you meet the lender’s criteria. Also, ensure that your application is duly filled, along with furnishing updated and accurate documents to enhance the chances of home loan approval.