Home Loan Cibil Score: The Reserve Bank of India has recently cut the repo rate by 25 basis points, which is expected to reduce the interest rates of home loans. However, banks have not yet announced any reduction in home loan rates. It is believed that the RBI's decision will affect the banking sector and they will soon reduce the interest rate of home loans. If this happens, the loan customers will get relief in their EMI.
Should you take a home loan now?
If you are thinking of taking a home loan to buy a new house, then it may be beneficial to wait a bit. Often, banks take time to pass on the benefits of interest rate cuts to the customers. Banks may announce a reduction in interest rates in the coming few weeks. If this happens, you will be able to get a loan at a lower interest rate later.
How important is a credit score for a home loan?
A credit score is most important for taking a home loan. This score shows your better finance management. The bank decides your loan eligibility on this basis. Usually, a score between 650 and 700 is required for a loan, but having a score of 750 or more increases the chances of getting a loan at a lower interest rate.
Chances of loan approval based on credit score-
More than 750 - Easy loan approval and low interest rate.
700 to 749 - There is a good chance of getting a loan, but the interest rate may be a little higher.
650 to 699 - Loan can be obtained, but the terms will be strict and the interest rate will be higher.
Less than 650 - Difficult to get a loan, the bank may demand a co-applicant or a higher down payment.
How to increase the chances of getting a home loan?
Improve credit score - If your credit score is low, then keep these things in mind to improve it.
Pay EMIs and credit card bills on time. Keep your credit card usage below 30%. Avoid taking multiple loans at once. Check your CIBIL report for any mistakes and get it corrected. Maintain a balance of secured loans like home loan or auto loan and unsecured loans like credit card.
Make a higher down payment-
If you can make a down payment of 20-30%, the bank will easily give you a loan, and the interest rate may also be low.
Apply with a co-applicant-
If your credit score is low, you can apply for a loan with your spouse or a family member, which will increase the chances of getting approval.
Take a loan for a longer period-
If you keep the loan period for 20-25 years, your EMI will be reduced, which will give the bank more confidence in your ability to repay the loan.
Show regular income source-
Banks give preference to those applicants who have a stable job or a regular source of income. If you are salaried, submit documents like salary slip, bank statement and income tax return.
Disclaimer: This content has been sourced and edited from Hr Breaking. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
