How to Increase Your Home Loan Eligibility?
When it comes to home loan, it would not be wrong to say that it is absolutely a boon for more than one reason. However, as far as eligibility is concerned then it is totally a different ballgame. Yes, being eligible for a home loan is not at all an easy thing. In order to make you eligible for a loan, the banks consider your assets, income and current liabilities. However, if your mortgage requirement is quite higher than the loan amount you are eligible for, with just few changes you can increase your eligibility.
Here are few tips that can help in increasing your home loan eligibility:
1. Increase the Loan Term
One of the oldest methods to increase your home loan eligibility is to choose a higher loan term. The key reason behind this is the decrease in the EMI payment with the increase in the term. In malice of the high term, both the principal amount and interest rate will stay intact in this option. The loan eligibility will be naturally elevated accounting to low EMI, thus increasing your ability to pay.
Increase Your Loan Tenure: Once you increase your home loan tenure, your eligibility for loan can easily be increased. But, one thing that you should keep in mind is the fact that banks do not increase your loan tenure beyond 30 years.
2. Pay Your Existing Loans
Following the liberalization of the Indian economy, opting for home loans has become a norm. Seeing the rising demand for the home loans, being eligible for a home loan has become a major question which many people don’t have an answer to.
If you have pending loans such as car loan or personal loan, then it can affect your home loan eligibility. As per the industry standards, if you have more than 19 existing unpaid loans, it does affect your loan eligibility. In such a situation, you can either prepay the loan in parts or make a full payment and increase the odds of your loan eligibility. For instance, if you are having let us say 15 pending loans, then you can approach HFC (Housing Finance Corporations) with a clean record after making a prepayment.
To increase your home loan eligibility, it is absolutely important to clear your existing credit card loans or personal loans. If you are still repaying your existing loans, it is clearly a big NO for you to get the eligibility. All you need to do is just pay your existing loans or credit card payments, close those accounts, get the no-due certificate and make sure that it is updated in your current credit score of CIBIL.
3. Clubbing Different Incomes
You can also increase your eligibility by clubbing the income of your father, son, spouse, and mother. Let me explain this with the help of an example. Let us assume, the loan eligibility for an individual is Rs. 1,00,000 based on his income for certain criteria, but the anticipated loan amounts to Rs. 2,00,000.
Let us assume that the individual’s spouse is also earning the same annual income. In this case, the individual can apply for the home loan by clubbing the income of both of them. So, with the clubbing of the couple’s income, the loan eligibility is increased. In order to be eligible for a home loan is altogether a different ball game. Eligibility is indeed a tricky process as the lenders take into consideration your assets, income, and current liabilities. If the loan requirement is slightly higher than what you are eligible for, then small changes in the way you project yourself (as an applicant) can really come handy in increasing your eligibility.
4. Go for Step-up Loan
Another way to increase your home loan eligibility is to take a step-up loan. In simple terms, in a step-up loan, you will have to pay low EMI in the initial years and increased amounts in the second year of the home loan.
Consider Step Up Loans: When it comes to step up loans, they are a great medium to increase your loan eligibility, especially for those who are in such professions in which one struggles at early stage. But for them, the possibility of getting the good rewards is quite higher as they can establish themselves as a CA or doctor. Under this scheme, in the initial years, the banks are ready to offer you home loan at lower EMIs, and your EMI gradually increases once you start repaying your loan amount.
Other ways to step-up income
Income of Spouse: If your husband or wife is also earning, it would be great to apply the joint application for a home loan. This thing will automatically help in increasing your loan eligibility tremendously. Not only this, if your spouse is also an earning member, the liability of repaying the loan amount is left on both.
Rental Income: If you have a house in your hometown that is still empty, all you need to do is-give it on lease. Yes, the rent that you will get from this house can be your additional source of income which will ultimately help in enhancing your home loan value.
Variable Pay: To increase your eligibility, it is important for you to keep an eye on the variable pay or perks you earn on a monthly or yearly basis as a part of your job. With the help of doing so, the banks will consider this record of yours when they calculate your loan eligibility.
5. Keep a Track of Your Credit Score
When it comes to a home loan, your credit score plays a crucial role. It is advisable to check your credit score six months before applying for the home loan and make sure the details of the loan should be verified as well.
You have to ensure that all your loan details are accurate. With a bad credit score, you cannot expect to get a home loan. Make sure you have thoroughly checked all the information in the credit report and if you come across any unusual record, make sure you have rectified it immediately with your respective banker. If your credit score is less, make your best efforts to improve your score. Take Your Time: You need to increase your CIBIL score, before you apply for a home loan. Take your time and look for the errors and try to have a clean CIBIL report. Always keep in mind not to apply for a loan with many lenders so as to avail the loan quickly. If you have a good CIBIL score, the banks will welcome you with open arms to provide you a loan at competent interest rates.