Smart Ways to Improve Your Home Loan Eligibility

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With property rates soaring in the UAE, most residents and nationals opt for home loans in the UAE to purchase their dream homes. In case you are a first-time home buyer, you must know that it is crucial to meet your provider’s eligibility criteria to get your home loan. 

Most banks and financial lending institutions take several factors like your credit score, credit history, income, age, and so on into consideration before providing you with a home loan. Some more important factors, on the other hand, taken into account are your repayment capacity, term of home loan, whether you are taking a joint loan, and more.

This article will discuss the major ‘how to’ part here, i.e., how you can improve your home loan eligibility. Without further ado, let’s have a look at the steps for the same.

Get a Co-Applicant to Avail of a Joint Home Loan

You can include a co-applicant to easily get a home loan if you have a low credit score, insufficient income, or higher total EMI obligations. A co-applicant with a stable income and good credit score can drastically increase the chances of getting your home loan approved. Moreover, having a co-applicant can also improve the chances of getting a larger loan amount. 

The co-applicant could be a spouse or a family member who agrees to repay the loan in case you are unable to. The bank will take the co-applicant’s assets, salary, and credit history into account as well. This, as one may expect, will impact the home loan eligibility and the repayment interest rate. 

Improve Your Credit Score

A good credit score enhances your home loan eligibility and also enables you to negotiate the terms of the home loan in UAE. This is so because banks in the UAE take applicants’ credit scores into consideration to estimate their creditworthiness. 

All banks and financial institutions look into your credit report and evaluate your credit history which includes all your loans, credit card debts, and missed or delayed payments when you apply for a new home loan. And while there is no universal minimum limit with respect to the credit score requirement for home loans in UAE, a score above 750 leads to better chances of getting a higher loan amount at lower repayment interest rates. 

All these benefits can be availed of only if your credit score is high. For this, you can try to repay your loans on time, clear your credit card bills, avoid exceeding the credit card limit, and be responsible with your finances. Please note that besides credit card bills, you should also pay your utility bills, i.e., DEWA and SEWA bills regularly.  

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Clear Your Debts

Banks and other lending institutions often avoid giving home loans in the UAE to defaulters. As per the rules in the UAE, the debt burden ratio (DBR) for any UAE resident should not be more than 50%. This means that your overall monthly instalments for your existing loans should not be more than 50% of your monthly income. 

Your DBR is computed by summing up all the monthly repayments of the existing loans and 5% of the overall credit limit of your credit cards. To avoid facing any difficulty in obtaining a home loan in UAE due to a high DBR, you should clear as many of your debts as possible and ensure that your debt doesn’t exceed the specified ratio of your income. 

Besides the repayment, you should also present your savings and investment portfolio to enhance your home loan eligibility. Additionally, if you have extra income sources, mention them clearly to the loan provider to show your repayment capability with the presence of sufficient funds.

Opt for a Longer Repayment Tenure

You boost your chances of getting a home loan in the UAE when you choose a longer loan repayment tenure. Such a long tenure reduces the amount you would need to pay as monthly instalments and improves your home loan eligibility. 

However, it’s essential to remember that even though your loan EMI amount reduces, the total interest amount may increase with an increase in the loan repayment tenure. So if you are planning to secure a home loan, first calculate the EMI that you would need to pay using a home loan EMI calculator. This can help you decide the appropriate tenure for your loan depending on your repayment capacity, income, and other financial goals. 

Compare the Home Loan Offers from the Top Banks

Comparing the available home loan options gives you an enhanced understanding of these loans, which can make negotiation easier and increase the probability of getting the home loan to suit your requirements. 

If you are a first-time home buyer, you should first do thorough research before securing a loan. You should explore the home loans provided by the top lending institution in the UAE and compare their interest rates, repayment tenures, processing fees, and other related costs. 

Here is how you can start the process of getting an ideal home loan plan for yourself –

  • Approach a bank with whom you already share favourable consumer relationship. This is because banks tend to offer preferential interest rates or other terms and conditions to their existing customers. 
  • After obtaining quotes from the bank, visit online marketplaces and compare the offer you have in hand with what other lending institutions are providing. This way, you can select a home loan plan that does not disturb your monthly budget, is available at lower interest rate payable, and has an appropriate term.

Secure Home Loan in the UAE from Policybazaar.ae

You can browse through the home loan offerings of the top banks in the UAE and choose one that meets your requirements with policybazaar.ae. Our website has revolutionised the banking experience by bringing the top banking products like home loans in the UAE at your fingertips. 

You can explore our easy-to-navigate website and quotes page that host a pool of home loan options at the most affordable rates in the emirates. If you get stuck during the selection process, you can also seek assistance from our team of financial experts. 

When you make a purchase from Policybazaar UAE, you are eligible for –

  • 24/7 customer support
  • Pool of options to choose from
  • Free consultation with the financial team
  • Access to the best options at the most affordable rates
  • Easy and free access to your credit score

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Other Factors to Consider

The following are additional tips to improve your home loan eligibility –

  • Income is, indeed, one of the most important factors when it comes to evaluating your eligibility for a mortgage loan in the UAE. A higher income implies higher repaying capacity, which increases your chances of getting a home loan. Moreover, you can even get a higher loan amount with a high income, as it corresponds to a high repaying capacity.
  • Age also plays a significant role in determining whether you will get a home loan in the UAE. A young earner usually has better chances of getting a home loan (and at favourable terms) than older individuals, as the former still has the potential to grow in terms of income and career without the liabilities related to health brought by old age. 
  • The nature of your job also impacts your home loan eligibility. If you are a salaried employee, the chances of you getting a home loan would generally be on the higher side as you have a steady income source. 

Key Takeaways

  • To get a home loan in the UAE, it is necessary to meet the home loan eligibility criteria first. Some of the factors that influence your eligibility are your credit score, income, Debt to Burden ratio (DBR), and more. 
  • One of the best ways to improve your home loan eligibility is to loop in a co-applicant and take a joint home loan. The co-applicant could be a spouse or a family member who agrees to repay the loan in case you are unable to. The bank will evaluate the co-applicant’s assets, salary, and credit history. 
  • Maintain a good credit score to improve your home loan eligibility, as the banks look into your credit score to determine your creditworthiness. Although there is no minimum limit on the credit score, a score of more than 750 is favourable as it can bring you a higher loan amount at lower repayment interest rates. 
  • Banks and other lending institutions often avoid giving home loans in the UAE to defaulters. Moreover, the debt burden ratio (DBR) of any UAE resident should not exceed 50% of their income as per the laws in the UAE. Thus, you should make sure that your monthly instalments are not more than 50% of your monthly income. 
  • You should present your savings and investment portfolio to enhance your home loan eligibility
  • You can increase your chances of securing a home loan in the UAE when you choose a longer loan repayment term. It reduces the amount you need to pay as monthly instalments and improves your home loan eligibility. 
  • Other factors that impact your home loan eligibility are your income, age, and occupation

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