Home loan with Low Income
If an individual belongs to low-income group, then he can apply for home loan by making a joint application, borrowing less loan amount, reducing the existing liabilities or depositing large sum of money as downpayment. Many banks have also arranged home loan schemes to the low-income groups.
Some people feel that they are not eligible for obtaining home loan. They are unemployed or are receiving pension or government benefits. Persons with bad credit score cannot apply for home loans as their substantial amount of income is spent in paying EMIs and credit cards.
It is true that lenders evaluate the home loan applications on the basis of income of an applicant. Your income must cover your loan repayments in the form of EMIs. Apart from these, your income is spent for home repairs, taxes and home insurance, if any. Planning your income is essential before applying for home loan. If you are not getting the benefit of specialized home loans for low-income groups, you can work on your weak areas and then apply.
The steps for strengthening your eligibility for getting home loan with low income can be listed as follows:
If your spouse is earning well, then you can make a joint application for home loan. The bank will understand that you will divide your future loan repayments between you and your spouse. The property will also be owned jointly by you and your spouse. The financial background of both borrowers is considered by the bank. You may also purchase property by making joint application with a partner or friend or co-signer. You must always enter into a proper legal agreement. This will help at the time when the property is divided between the parties.
No more loans and loans
You must keep a track of your debts and liabilities. The lending bank analyzes your past financial transactions along with your income records. If large portion of your income is spent towards payment of debts, then lending bank will never accept your application. You must get your credit score, work on your loopholes and then make a fresh application for home loan.
Reduce the size of home loan
If you are applying for home loan, apply it for a small amount. If you have applied for substantial amount, then the bank will not take a risk. The bank is of the opinion that you won’t be able to repay out of your low income.
Increase the downpayment amount
If you have low income, then try to deposit large amount in the bank as downpayment. The lender will feel that you are able to plan your finances efficiently. Moreover, you will ask for less loan amount according to your income level. You may arrange your downpayment amount from your savings, borrowing from friends or from private lenders. But you must record all your future repayments properly.
Thus, even if you have low income, don’t lose hope. Having low income and bad credit are two different situations. You can also discuss with your lending bank about your financial plans with regard to loan repayments.
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