Everyone dreams of buying their own home. However, it takes years to budget and save money to purchase a house.
Housing finance makes it easier for homebuyers to purchase their property.
Tips for Getting Loan Approved Faster
Lenders consider several factors before approving your loan, including employment type, income bracket, and credit eligibility. These factors play a big role in determining your loan amount and interest rate.
So make sure to have the following factors ready in advance for easier loan approval.
Pay Down Payment Out of Pocket
If you save approximately 10 per cent of your loan requirement, you can use it towards paying the down payment amount on your home. This will reduce the loan amount you need to apply for, thus reducing your overall loan burden.
You can use a home loan interest calculator to get the interest on your loan amount. Based on this calculation, you can select the loan amount you should apply for.
Improve Your Credit Score
Lenders will consider your credit history before granting your loan, and a good credit score can boost your loan approval chances.
Try to maintain a credit rating of 750. Paying all your credit card bills on time and clearing off all existing debts can help increase your credit score. Ideally, you can speed through the home loan application with a stable income and a good credit score with minimal delays.
Besides the credit score, you also need to evaluate your credit health report. If you see any errors on the report due to miscalculations by previous lenders, get them corrected before applying for your home loan.
Gather all Documentation
Lenders need several documents from you when you apply for a home loan. Apart from basic documentation like identity proof and proof of residence, you also need to submit the following documents based on your occupation.
For salaried individuals, you need the following documents:
- Last 6 months’ payslips
- 6-month bank statement, where salary is getting credited
- Income Tax Returns for the past 3 years
Self-employed people need the below documents:
- Proof of business address and registration of the certificate of establishment
- Income Tax Returns for the past 3 years
- Balance sheet and profit and loss statements
Be Prompt in Response to Lender
Lenders might sometimes ask for additional documentation or reports to evaluate your loan application. When you get such requests, try to get the requested documents to the lender as soon as possible.
This will show your co-operation with the loan processes to the lender.
If you cannot get the documents soon, inform the lender how much time you need to gather them. Delaying your replies stalls loan processing and may also cause you to miss out on your dream home.
Take a Combined Loan
If there are other earning family members in your house, you can share the loan with them by taking a combined loan. This will increase your chances of getting the loan amount you requested and reduce your loan burden if you share it with someone else.
You can even apply for a higher loan amount if you combine it with someone else.
Declare all Additional Income Sources
If you have any other sources of income apart from your salary or professional income, declare them to the lender. A higher monthly income equals a better ability to repay your loan, which will help increase your odds of loan approval.
You will need to submit all proofs of additional income, such as bank account statements where the money is credited and a payslip or invoice from the employer.
Opt for a Longer Tenure Loan
We all know that a longer loan tenure means lesser Emil, since you have more time to pay off your loan. But a longer tenure may carry a higher interest rate.
You can use a home loan interest calculator to determine the interest and monthly installments for a particular loan amount. If you think you can get a surplus or commission in the future, you can initially apply for a longer tenure and make part-repayments whenever you get surplus funds.
This way, you can repay the loan ahead of time and save on interest repayment.
Although, some lenders might have a prepayment fee, so make sure to know about such charges before finalizing your loan.
When you have all the required documents, and other eligibility criteria sorted beforehand, the process of getting your housing finance becomes easier and hassle-free. Lenders don’t have to contact you repeatedly for verification, which puts you in a favorable light with the lending company.