Increasing your mortgage borrowing capacity is essential for those looking to purchase a home or invest in property. By implementing certain financial strategies, individuals can enhance their eligibility for larger loans. This introductory guide explores key steps to expand your borrowing capacity. Through these measures, you can position yourself for greater financial flexibility and increase your chances of securing the mortgage you desire.
- Get a Co-Applicant:
If you have insufficient income or high existing EMI obligations, including a co-applicant can significantly increase the chances of getting your home loan approved. A co-applicant with a stable income and good credit score not only enhances eligibility but can also lead to a higher loan amount. The co-applicant can be a spouse or a family member who agrees to share the responsibility of loan repayment. - Improve Your Credit Score:
Having a good credit score is vital for home loan eligibility. Banks and financial institutions in the UAE consider the credit score to assess the applicant’s creditworthiness. To improve your credit score, ensure timely repayment of loans, clear credit card bills, avoid exceeding credit limits, and pay utility bills regularly. - Clear Your Debts:
Lenders are cautious about providing home loans to individuals with a high debt burden ratio (DBR). UAE regulations state that monthly loan repayments, including credit cards, should not exceed 50% of the borrower’s income. To enhance eligibility, clear as many existing debts as possible and ensure your debt remains within the specified ratio. Presenting your savings and investment portfolio can also enhance your loan eligibility. - Opt for a Longer Repayment Tenure:
Choosing a longer repayment tenure can increase your chances of securing a home loan. Although longer tenures reduce monthly installments, it is crucial to consider the overall interest payable, which may increase. Use a home loan EMI calculator to determine the appropriate tenure based on your repayment capacity and financial goals. - Compare Home Loan Offers:
Comparing home loan offers from top banks allows you to find the most suitable loan option. Research the interest rates, repayment terms, processing fees, and other costs associated with home loans offered by different lenders. Begin by approaching your existing bank, which may offer preferential rates for existing customers. Then, explore online marketplaces to compare offers from other financial institutions.
However, navigating the complexities of mortgage borrowing can be daunting, which is why seeking guidance from experienced mortgage advisors is crucial. These professionals can provide personalized advice, analyze your financial situation comprehensively, and help you strategize to optimize your borrowing potential. With their guidance, you can navigate the process with confidence and secure the mortgage that best suits your needs and goals.
