Everyone wants a house of their choice to spend life happily. However, some people do not have ample monthly income to pay for a new house upfront. It does not mean people cannot enjoy a new house in India. With a home mortgage, people can buy their dream house and pay for it in EMIs. A home mortgage might change the financial dynamics of an individual over the years. It is because the individual will pay home mortgage EMIs over the loan tenure. Before applying for a home loan, applicants should focus on making their loan application strong. Read on to know some tips to get approved for a home mortgage in India.
1. Understanding home mortgage loans in India
In India, a home mortgage is commonly referred to as a home loan. A home mortgage loan is offered to purchase a property/land/house. A mortgage is also provided for purchasing other types of real estate in the country. After buying the property with a mortgage, an individual has to return it to the bank in EMIs. The entire property amount will be divided into principal and interest charges throughout the loan tenure. The property will itself serve as collateral for the mortgage taken from the bank.
People can also use a mortgage loan for other purposes than buying a new house. However, people have to use an existing home as collateral to get a mortgage. With an existing property, one can raise funds by using it as collateral and acquiring a mortgage from a bank. Both residential and commercial properties can be used as collateral to obtain a mortgage in India. Be it a loan for a new home or raising funds in general, an applicant needs to get approved for a mortgage by the lender. Let us know some ways to improve the home mortgage loan application.
2. Tips to get approved for a home mortgage in India
Banks take some time to review the home mortgage application of an applicant. Then, they either approve or reject the home mortgage application based on internal guidelines. Ways to boost your chances of getting a home mortgage in India are as follows:
3. Healthy credit score
Usually, home mortgages in India are secured loans. However, it does not mean one can obtain a mortgage without a good credit score. If the credit history of an individual is under scrutiny, the home mortgage application can be rejected. A credit score of 700 or above is needed to obtain a home mortgage easily. The credit score of an individual highlights their creditworthiness and risk factor. With a perfect credit history, it can be easy for an individual to obtain a home mortgage. If there are any discrepancies in the credit history, an individual should rectify them before submitting the loan application.
4. Steady income source
Apart from the credit score, banks also use the monthly/annual income of the applicant to judge creditworthiness. Usually, lenders run a background check on the applicant before approving the home loan application. If an applicant does not have a steady source of income, they cannot pay EMIs timely to the bank. For such an applicant, the mortgage application will be rejected by the bank. Apart from the principal amount, mortgage loan interest has also to be paid to the bank. Individuals need to have a stable source of monthly income to pay the interest and principal timely.
5. Zero previous debts
Old debts can affect the chances of getting a mortgage loan in India. Individuals having an old debt should clear it before applying for a mortgage. Old debts that have been around for a long will reduce the chances of getting approved for a mortgage. Individuals are also advised not to open a new credit line while applying for a home mortgage.
6. Pre-approved mortgage
One can get pre-approved for a mortgage in India. By submitting the financial and personal information to the bank, an individual can get pre-approved for a mortgage. By doing so, individuals can know the highest amount of mortgage to be approved. Individuals can learn about the loan amount they can get and look for a suitable property accordingly.
Home mortgages can help individuals to use an existing property as collateral. Apply for a mortgage loan with PNB Housing right away!