How to increase home loan eligibility in 6 simple steps – Houses are very expensive and most people have to opt for a loan to buy a house. Due to the high cost of houses, loan amount is also required. What will you do if you do not get the loan you need? I mean that your loan eligibility is less than your loan requirement.
In this post we will discuss about 6 simple tips or ways to increase your home loan eligibility. Before proceeding, let us see how banks assess your loan eligibility.
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How bank find out the eligibility of your loan
The bank will give you only that amount of loan, which you can easily repay. You are sanctioned loan according to the EMI you can pay.
Suppose your monthly income is Rs 50,000. There is no other debt on you. The eligibility calculation rules vary according to banks. If your bank have rule that a loan with EMI more than 50 percent of your income will not be given. If your monthly income is ₹ 50,000/- then maximum EMI can’t exceed ₹ 50,000/-.
You can calculate your loan eligibility using the maximum EMI, loan tenure and interest rate.
Important factors that decide home loan amount
- Repayment Record
- Regular source of Income
- Strong Financial Record
- No dues
- Good CIBIL Score (above 750)
- Less Credit Utilization Ratio
- Fewer Dependents
How to Increase Home Loan Eligibility
Let’s discuss some simple steps to increase your home loan eligibility.
Increase your income
It is easy to understand, but it is probably not easy to do. If the income increases, you can pay more EMI. If you can pay more EMI, then your loan eligibility will also increase. You can add another source of income while applying for loan. Other source of income may be rental income, part time business, other income sources etc.
Take a Joint Home Loan
If you make your wife / husband as co-borrower (co-borrower), then the income of both of you will be added to get the loan eligibility. This also increases your loan eligibility. Note that income will increase only if your wife / husband have any income.
Improve CIBIL Score
CIBIL score helps the lender to assess your credibility as well as loan amount. Credit score above 750 is considered good that makes you creditworthy and risk free for lender. So take care of your credit score. Even if your credit score is good, the bank may consider you to give more loan.
Repay old loans
As we know that while calculating your loan eligibility, your existing loan is also taken into consideration. Existing loans reduce your loan eligibility. Therefore, you can increase your loan eligibility by paying off the existing loan if any.
Increase the loan term
The EMI of the loan decreases as the loan period increases. If you take a loan of Rs 40 lakh for 20 years (9% interest rate), then your EMI is Rs 35,989. Your monthly income should be 71,978 for such a loan.
If your monthly income remained Rs 71,978 and you took a loan for 30 years, then your loan eligibility would have been Rs 44.72 lakh. You can see that the eligibility of the loan increased from 40 lakh to 44.72 lakh after the loan period was 20 to 30 years.
Get new loan products
Banks are also coming up with such loan products these days, where your loan eligibility is more.
One such example is SBI Flexi Pay Home Loan. In this loan, your loan eligibility increases by 20%. To do this, the bank only charges interest in the first few years.
Apart from this, there are some other products, where you can take a joint loan with your parents. As long as your father is working, both of you will pay EMI and EMI will be higher. When your father retires, only you have to pay EMI.
Conclusion
Apart from the suggestions given above, there are some ways to get more loans. You give some extra security, even then the bank may be ready to increase your loan amount. Do proper research, compare loan options, interest rates and other charges before applying for home loan. Choose between fixed or floating interest rates on home loan after proper information.
You must opt for home loan only after proper estimating your earnings or income. Take only that loan amount which can easy repay later. We hope these simple tips and suggestion will help you to enhance your home loan eligibility.
