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Top 5 Tricks to Increase Your Home Loan Eligibility

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Home Loan Eligibility simply means how much loan amount you can get for buying a home. Just because you are earning Rs 1 lac a month, does not mean that you can take a Rs.50 lacs loan. Its always based on a formula and is calculated based on some formula and logic. There are several other kinds of loans like Personal loans, Car Loan, Education loans – but out of all the loans, the home loan is the biggest ticket size loan and takes longer to pay off.

Home loan greatly helps first-time home buyers to own a property on easy terms along with long repayment tenure. When you apply for a home loan, the first thing that the lender does is check your eligibility. If you fit its eligibility criteria then only your loan application moves to the next step. If your mortgage requirement is marginally higher than what you are eligible, small changes in the way you project yourself as the applicant may help in increasing your eligibility.

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Here’re five important tricks that can help you improve your eligibility for a home loan: 

-Work on your income and tenure

 
Look out for those nagging credit card loans or personal loans that you took a couple of years ago to purchase one of your fetishes that you are still repaying. This is clearly a red flag when a lender is trying to assess your eligibility. Banks look at your monthly income to evaluate if you can accommodate loan EMIs along with your other expenses. Suppose, your net income after meeting all the obligation is lower than the expected EMI for the loan, then banks may refrain from lending you money. EMI obligation can be reduced by increasing the tenure.

-Clear the existing debt position

You can increase the EMI amount and close the loan early if your income increases in the future. Normally there is no penalty for loan pre-closure. While checking your repayment capacity banks subtract your existing EMI obligation from the net income.

 
Suppose, your net income is Rs 50,000 and EMI obligation on your existing loan is Rs 15,000. Bank in this scenario will consider your repayment capacity to be only Rs 35,000 (Rs 50,000 ‘Less’ Rs 15,000). Even if your existing loan’s remaining tenure is 1 year or a few months, it may negatively impact your loan eligibility.

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-Apply for the loan along with a co-borrower

This is one way which has the potential to save you from a loan rejection. Your combined income with your co-borrower can meet the income gap required by a bank to give you a loan. A co-borrower can be your spouse or any other person. Bank will look at the combined capacity of both the applicants to assess the loan eligibility.

-Consider step up loan

Some of the banks allow step up home loan facility. This is specially designed for the borrowers who expect their income to increase in the near future but currently are not capable to service a high EMI amount. Under this loan, the borrower is asked to pay a lower EMI in the initial few years. The EMI increases over the years considering that the income of the borrower would have increased in such period.

 
-Add an additional source of income

If you are falling short of the income for fulfilling the loan eligibility, then you can add another source of income such as rental income or interest income from deposits, or show bonus from employer to prove income eligibility. You can also add income from freelance work to increase the income level.

You must take care of some other important points like keeping your CIBIL score at a higher level, stay ready with the down payment money and select the property which fits into your financial capacity.

 

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