Let’s assume that you want to purchase an apartment or an individual house but you don’t have enough funds. In such a case, the best option is to apply for a home loan. But, before you can go ahead, it is imperative to know about your home loan eligibility. This article deals with the prerequisites of a home loan and how you can maximise your home loan eligibility.
How Financiers Evaluate Your Loan Eligibility
When you apply for a home loan, banks will first look at your current financial status and credit score. If you have failed to pay dues repeatedly or have an outstanding debt, chances are your loan application will be rejected.
Financiers keep a track of corporate and businesses that have been successful in securing loans on a regular basis. Therefore, if you work for a recognized and reputed company, it is an added bonus and will improve your home loan eligibility. Lastly, remember that banks use a home loan EMI calculator and if the EMI on your loan is more than 50 percent of your salary, it will be difficult to get a loan approval. Depending on the eligibility of the applicant, companies like Bajaj Finserv analyse various factors while approving a Home Loan application.
Here are 5 tips to improve your home loan eligibility.
- Increase the Loan Tenure
Remember that interest rates remain constant during the loan tenure for fixed interest loans. So, if you think you can’t pay the EMI quoted by your bank, you can extend the loan tenure. When you increase the loan tenure, the EMI will decrease and you will be able to pay it off on time. This will definitely improve your home loan eligibility.
- Clear All Existing Debts
If you have multiple debts, it’s best to clear them off before you apply for a new home loan. Banks consider applicants with multiple loans high-risk borrowers. Therefore, it is always advisable to pay off previous debts so that you can easily pay the EMIs on your new loan.
- Merge Incomes
Let’s assume that you live in a family that has multiple sources of income. In this scenario, merging them will improve your home loan eligibility significantly. For example, if you want to apply for a home loan of INR 50,00,000 but are only eligible for INR 30,00,000, then your loan application will be rejected. In such circumstances, you can combine the incomes of other family members to meet the criteria and get your loan approved.
- Mention Alternate Sources of Income
When you are applying for a home loan, remember to include your other sources of income. For example, if you receive rental returns and bi-yearly bonuses, mention them in the application as it will enhance your loan eligibility.
- Apply for a Step-Up Loan
Some institutions like Bajaj Finserv allow you to apply for a step-up loan, where you pay lower EMIs at the beginning of the loan tenure. As you move into the second part of your loan tenure, your EMIs too will increase gradually. In this kind of loan agreement, banks take into account your future salary hikes and that improves your loan eligibility.
Now that you have learned about different ways in which you can improve your home loan eligibility, remember to check home loan interest rates offered by different lending institutions. Some financiers, like Bajaj Finserv, allow individuals to apply online for a home loan.