Most homebuyers these days take out a mortgage to buy their dream home. Housing has become very expensive, making it nearly impossible for people to buy a home without external financial assistance. This financial assistance is often provided in the form of a mortgage.
So it’s not all that surprising that over the past few years, the number of mortgage applications received by lenders has increased exponentially each year. Because of this, lenders have become extra cautious about choosing the right borrower. From the lender’s perspective, a suitable borrower is one who pays the loan EMI on time and does not pose a financial risk of loss to the lending firm. Lenders these days carefully review every mortgage application and quickly decline a mortgage application if they have even the slightest doubt about the borrower’s ability to repay. Mortgage denials reduce the borrower’s chances of getting a loan in the future and should be avoided at all costs.
Lenders assess a borrower’s repayment ability and creditworthiness by analyzing mortgage eligibility. Lenders assess applicant eligibility based on several factors such as age, income, and CIBIL score. Poor borrower eligibility may result in loan application denial. But the good news is that it is possible to strengthen your eligibility and increase your chances of getting a loan approved. Read on to find out how.
Tips on How to Increase Your Chances of Mortgage Approval
Take a look at the tips below on how to increase your chances of getting a mortgage approved.
Lenders try to understand whether a borrower can repay a loan based on various factors, the most important of these factors being credit score.
National credit rating agencies assign credit scores to borrowers based on various factors such as repayment history, credit utilization, credit structure, and credit applications.
Borrowers with good repayment history, low credit utilization, and those who do not rely heavily on credit have higher credit scores. On the other hand, borrowers who have defaulted on their loans in the past or who have a large amount of debt usually have lower credit scores.
If you want to increase your chances of getting a mortgage approved, make sure your credit score is at least 750. If your credit score is below 750, improve your credit score first before applying for a loan.
Note: In India, the terms CIBIL score and credit score are used interchangeably, but they are different. All credit rating agencies assign a credit score, but Transunion CIBIL, the most popular agency in the country, calls the credit score it assigns to borrowers the CIBIL score.
All mortgage lenders have strict mortgage eligibility requirements. Most lenders calculate mortgage eligibility based on several factors such as the borrower’s age, income, and city of residence. Mortgage applicants who do not meet the lender’s eligibility requirements will be rejected immediately. So, before you apply for a mortgage, check to see if you meet your financial institution’s mortgage eligibility criteria. Please apply if you like. If you do not meet the eligibility criteria, strengthen your eligibility before applying for a loan.
Additionally, home loan applications are often denied if the applicant applies for a loan amount far in excess of the terms. Mortgage applicants use the Mortgage Eligibility Calculator to calculate the loan amount they are eligible for and apply for only this loan amount or less to increase the chances of their loan being approved is needed.
reduce the debt to income ratio
Debt-to-income ratio refers to the percentage of your income that goes towards paying off your debt. The higher the debt-to-income ratio of an individual, the lower their ability to repay.
In general, lenders will not lend money to people whose debt-to-income ratio is already over 40% of their income. If you have a high debt-to-income ratio, pay off some of your debt. This will increase your repayment capacity and increase your chances of getting a loan approved.
A co-borrower if you believe your loan application will be rejected for reasons such as having a low credit score or willingness or need to take out a mortgage over the terms.
If two or more people apply for a mortgage together, the lender will assess their combined mortgage eligibility. So, for example, if your mortgage has a CIBIL score of less than 750 and you add a co-borrower with a CIBIL score of 800 or higher, the lender will check your overall CIBIL score and take it into account. to decide whether to extend the mortgage. I’ll lend it to you
Likewise, if your income is low and you can’t borrow the amount you want, don’t worry. Add co-borrowers with sufficient income to qualify for the desired loan amount. Remember, however, that co-borrowers have that role and responsibility, as they are responsible for loan repayment just like the primary borrower. Therefore, one must undertake this responsibility very carefully.
The last word
Getting Approved Isn’t Hard Housing loan. However, by adhering to the items mentioned in this article, mortgage applicants will not only enjoy faster mortgage approvals, but will also be able to take advantage of favorable loan terms such as lower mortgage interest rates and longer repayment terms. You can also