Being a single parent can be quite stressful. Single-handedly taking care of the household is no easy feat, and those looking to buy a house need to have a sound financial plan. Now, most homebuyers apply for home loan plans that cover a major part of the property cost. However, not having a co-borrower can increase the lender’s risk, which can cause complications in the approval of a home loan application.
However, this does not mean that a single mother cannot get a home loan. There are many ways in which one can effectively increase her chances of a home loan approval. Before applying for a home loan, make sure to keep the following things in mind:
- Try and increase the down payment
A home loan does not cover the full price of a house. Most lenders cover up to 75%-90% of the property cost, depending on the loan amount. The remaining will have to be covered by the borrower themselves. Now, it is better for a borrower to increase the down payment. This reduces the lender’s risk and can hence improve the chances of a home loan approval.
- Maintain a healthy credit score
Any financial institution will check an applicant’s credit record before offering them any kind of loan. A credit record is a history of the borrower’s previous debt and whether it was cleared off in time. Ideally, any lender would prefer their borrowers to maintain a credit score of 750 or more. This is one of the most important factors to keep in mind while applying for a home loan.
- Opt for a long repayment tenure
A lot of borrowers think that choosing a shorter repayment tenure can actually help in boosting their housing loan eligibility. However, this is not true. By choosing a short repayment tenure, a borrower will have to pay higher EMIs. This becomes more of a risk for the lender. It is easier for a borrower to pay off smaller EMIs in a long tenure, which reduces the lender’s risk. This is why it is advisable to opt for a long repayment tenure to increase the chances of a home loan approval.
- Use a home loan eligibility calculator
Submitting too many home loan applications is never a good idea as lenders consider this a negative sign. Make use of a home loan eligibility calculator, which is a tool that helps a user understand the loan amount that they can qualify for. This will help a borrower in knowing whether they should apply for the home loan or look for a lender that offers them a better deal.
By keeping these points in mind, a single mother can improve her home loan eligibility. It is also ideal to make use of a home loan EMI calculator. This calculator is a tool that displays the monthly instalments of a home loan. Based on the EMI results, one can easily find themselves a loan plan suitable to their budget.