The number of people in India buying homes has been rising. Among the reasons for this trend is the easy availability of home loan at attractive rates. The housing loan segment grew 18.7% in April 2019, accelerating from 19.9% growth in April 2018, according to figures published by the Reserve Bank of India.

Taking a home loan can help you get your dream house. Here are some tips for making sure that your home loan is approved without any hiccups.

Maintain a healthy credit score

Your CIBIL credit score plays a vital role in securing a home loan. It is recommended to have a CIBIL score above 750, while a score below 600 is considered poor. Those with credit scores above 750 receive 80% of the approvals. The credit score considers financial activities on your savings account and FD account as well as repayment of credit card bills and any personal loan you may have taken. The score is a reflection of your financial habits and decisions and, therefore, is indicative of your ability to repay your home loan.

Among all your financial activities, the most important ones arethe debts you owe and whether you have made payments on time. This doesn’t mean you should avoid debts. A credit score would be higher for a person who has taken a personal loan and paid the installments on time than for a person who doesn’t own a credit card and has never taken a personal loan.

Employment stability

Any lender would feel assured if the borrower has a stable employment background. So, if you are in the habit of switching jobs very often or quitting jobs before having an offer letter in hand, this habit needs to be changed. Having job stability reduces your chances of defaulting on repayments. That’s why banks approve personal or home loans for people who have held onto a job for at least two consecutive years.

The nature of your employer and employment can also have an impact on the loan approval. If the bank is dissatisfied with the reputation of the company you work for, your application may be rejected. It is also a good idea to highlight your professional accolades, bonuses and increments when applying.

Have a co-applicant

You can significantly increase the chances of receiving a home loan approval by having a co-applicant. This applicant could be your spouse or a parent. Home loan approval becomes more certain if your co-applicant has a good credit score. You can club your net income with that of your co-applicant when applying for the home loan. This gives the bank more of an assurance that the loan will be repaid on time.

Having a guarantor may also work in your favor, especially if the person has a long relationship with the bank, like having longstanding savings or FD account.

Ensure the property is issue-free

Sometimes home loan applications are rejected if the built of the property is questionable. This questionability is decided according to the guidelines of the relevant authorities. Banks sometimes hesitate in giving home loans for houses that are too old.

To increase the changes of approval, do let the bank know details of your illiquid assets. Also, having a history with the bank, like a savings account for a few years or taking and repaying a personal loan, can increase the chance of approval.

By Richard