Applying for two loans at the same time is not very common and is generally not encouraged. However, if you find yourself in the position where you need a home loan and an additional fast cash loan, it is possible to take on two loans together. However, there are a few things one should keep in mind.
In this blog, we will go over certain steps you can take to ensure that you comfortably apply for and pay off a home loan and an instant personal loan.
1. Check Eligibility Criteria for Each Loan
The first step in applying for a home loan and an instant personal loan is to check the eligibility requirements for each loan. These requirements vary from lender to lender. But generally, most requirements are based on age, income, job, and credit scores. Personal loans from loan apps tend to have more lenient eligibility criteria and quick cash disbursals, which may be a deciding factor as you evaluate different options.
2. Assess Your Finances
Before applying for any loan, you must have a clear understanding of your personal finances. Assess your financial needs to determine how much of a loan you need to take. Evaluate your current monthly income and expenses to decide on an EMI you can repay with ease.
If you already have a home loan and are considering taking an instant personal loan, or vice versa, you need to be able to manage the financial burden of paying two EMIs every month. Note that the rate of interest of each loan will be different and calculate your EMI accordingly. This will set you up for a stress-free loan experience.
3. Work Towards a Healthy Credit Report
Your history of repayments and use of previous credit products is encapsulated in your credit report and credit score. These are metrics that signify to lenders whether you are capable of repaying your loan or not.
Working towards a healthy credit report increases your chances of getting approved for two loans as it shows that you have been diligent in paying back your previous loans. Having a credit score between 670 and 740 is considered good, while a score above 740 is an excellent score.
Applying for a loan and timely paying it off gives you a chance to show your creditworthiness. So, if you do take on a home loan and a fast cash loan and manage to make timely repayments, your credit score will improve significantly.
4. Maintain an Ideal Debt-to-Income Ratio
A debt-to-income ratio is calculated by the sum of all your debts (cash loans, credit lines, credit cards etc) divided by your monthly income (salary, freelance income, passive income etc). The higher your debt-to-income ratio, the less likely you are to be approved for multiple loans.
An ideal debt-to-income ratio lies between 21% to 35%. The maximum ratio one can have and still be approved for a loan is in the 40% to 50% range. These numbers are ballpark figures because every individual’s financial situation is unique. Thus, it is helpful to have a smaller debt-to-income ratio to tip the scales in your favour.
5. Apply for Home Loan With a Cosigner
To increase your chances of getting approved for a home loan, you can apply with a co-signer. You would be the primary applicant who agrees to pay the EMIs. If you cannot make your payments on time and default on the loan, then the co-signer would be obliged to pay the EMIs instead.
