3 Ways to Increase Your Home Loan Eligibility
Your home loan eligibility depends on various factors such as your income, credit score, debt obligations, and more. These factors don’t change overnight. So, what if you want a home loan but the amount your lender has offered to lend is way too low for the price range you are looking in? While the factors we just discussed would not change overnight, you still have ways to increase your mortgage loan eligibility. Want to know what those ways are? Let’s take a closer look.
1. Opt for a longer amortization
Your maximum loan amount depends on the maximum amount of monthly payment you can afford to pay every month and how long the mortgage takes to amortize. Because you are spreading the payments over a longer period of time, the monthly payment will be lower. Fair warning that the longer the amortization, the more interest costs you will likely pay over time.
2. Get a co-borrower, or co-signer.
If you are having trouble qualifying for a mortgage loan at the amount you are wanting, you might want to considering adding a coborrower, or a cosigner. By doing this, the lender would add their income and yours together to increase your mortgage eligibility amount. When applying for a home loan, many people confuse a co-borrower and co-signer. What you need to know is that a co-borrower is someone who jointly applies with you for a home loan and holds an ownership interest in the property. A co-signer, however, is simply an individual who agrees to be a backup in case the borrower defaults.
3. Factor in Your Additional Income
If you have any source of additional income such as income from investments, rental income, business income or interest from savings, then do mention it to your lender. You can also mention the perks or additional bonus that you receive from your employer. The additional income, however, should be an amount that you expect to receive at least once in a year. In case there is any uncertainty as to whether or not you would receive the amount, the lender will not consider it while calculating the eligibility amount.