There are quite a few ways to increase your home loan eligibility. Here are few tips that will help in increasing your home loan eligibility:
- Age Parameter
- Step-Up Loans
- Increased Loan Tenure
- Add A Co-Applicant
- Other Income Source
- Pre-Pay Existing Loans
- Maintain Good CIBIL Score
- Existing Relationship With The Bank
1) Age Parameter
Apply loan in your early 20’s and 30’s. This gives you an added advantage of securing the longer repayment tenures. The longer the loan tenure, the lower is per lakh EMI which in turn enhances your loan eligibility and vice-a-versa.
2) Step-Up Loans
Apply for step-up home loans. A step-up home loan is one where the EMIs for the initial few years are lower than those in the later years in keeping with your expected increase in income in the future. Your home loan eligibility increases with step-up loans because even with the limited income you are able to meet the FOIR (Fixed Obligation Against Income Ratio) criteria of the banks. However it is to be noted that banks charge higher interest rates for step-up loans in comparison to the normal home loan interest rates.
3) Increased Loan Tenure
One of the oldest methods to increase your Home Loan eligbility is to go for higher loan tenure. The EMI decreases with the increase in the tenure. This is because per Lakh EMI reduces with every increase in the loan tenure. With this way you can easily qualify for the required eligbility on your loan application. The maximum tenure you can avail in Home Loan is upto 30 years.
4)Add A Co-Applicant
While many banks have a mandatory norm to add the co-applicant in the home loan application, it is advisable to add an earning eligible family member as a co-applicant to your home loan application. A co-applicant with good CIBIL score definitely helps to enhance your loan eligibility. A co-applicant is a co-borrower to the loan and can equally enjoy the benefits of tax deduction if they split the repayment burden- as per the income tax laws. A co-borrower has to be your blood relation i.e. your spouse, parents, children and at times even siblings.
5) Other Income Source
Add your additional income from other sources, such as a property rental income, agricultural income, and your variable income such as perks, incentives, bonus from company and dividends/returns on investments etc. this will help you to increase your home loan eligibility.
6) Pre-Pay Existing Loans
Prepay your existing loan and other debt obligations such as a personal loan or credit card outstanding balance as much as possible in order to enhance your loan eligibility. Banks assess your eligibility for a loan on the basis of your debt-to-income ratio. The debt-to income ratio is the percentage of your total monthly income that goes towards paying monthly debts such as EMI’s towards car loan, personal loan, education loan, loan against credit cards, and credit card outstanding balance etc. These being the short term loans have increased EMI and thereby hamper your home loan eligibility. Therefore possibly by closing all your short term debts you can enjoy the benefits of increased eligibility on your home loan.
7) Maintain Good CIBIL Score
Pay all your bills and loans in timely manner without any defaults. Paying your debts sincerely can help you to build a good credit score which, in turn, will enhance your home loan eligibility. A CIBIL score of 750 and above is considered to be a good credit score. A high credit score indicates your high repayment capacity and possess minimum risk for the banks to fund you which in turn increases your loan eligibility.
8) Existing Relationship With The Bank
Maintain a good relationship with the bank. Bank value their customers that practices and maintains good banking habits with their bank. Good banking means maintaining sufficient balance in the account over and above the minimum balance requirement, holding investments such as fixed deposits, recurring deposits, mutual funds, SIPs, etc with the same bank, not having poor track record or cases of EMI bounces for auto debits for your existing loans, etc. Having smooth banking helps to build good relationship with the bank and a good relationship with the bank will increase your eligibility for home loan.