Sagar had always wanted to buy a house of his own. He was 26 and had been working as a Business Analyst with a reputed firm for four years now. He felt like it was high time he invested in a place of his own. The only thing that troubled him was his age. Would the bank approve his home loan when he was still in his twenties? He expressed these concerns to his best friend, Ashish. Ashish whose brother had recently applied for a home loan while also in his twenties, gave him a set of tips that would increase Sagar’s chances of getting his loan approved. Here are some things that he told him:
- Choose your lender wisely– Not all lenders will consider your application suitable for approval because each lender has his/her own methods. But here are some general pointers that are taken into consideration while making the decision:
- The size of your loan
- Your income and employment status
- Credit rating
- Any existing debt
- Your expenses
If you check all these boxes for the lender, the chances of your loan getting approved are higher.
- Evaluate your credit score– Your credit score is an important factor that can impact your loan approval. Your lender needs to believe that you have the financial discipline to pay back your loan. To check this, they evaluate your credit score. This consists of records of your credit cards, previous loans if any and even utility payments.
- Manage available credit smartly– When in you are in your twenties it is easy to be impulsive and a lot of people end up maxing out their credit cards. This can significantly reduce your chances of approval because the lender may evaluate your repayment capability based on this. You need to strike a balance between not having too much debt (as lenders may expect you to rack up more debt) and not being too close to your limits (as it may make you seem incapable of managing your finances).
- Close inactive/dormant accounts– This factor usually has an impact on whether your application gets approved or not. Dormant accounts also lead to the risk of fraudulent activities and you may be required to update your details.
- Always pay your bills on time– Any delayed payments will always figure on your credit report. It shows your discipline when it comes to making payments. The worst part is these remain in your records for a long time. So, before you fill your application make sure that all your bill payments have been made on time.
Sagar had his loan approved in no time because he took care of all these factors that would make a difference. It is not impossible to avail a home loan in your twenties, as long as you can convince the lender of your financial discipline.