Are you planning to take a home loan? If yes, do you know about the loan amount that can be approved? The home loan market in the country is increasing every day and now it is easily available to the public. Since it is easily available to the people, it is also easy to get a home loan. Therefore, we advise you to understand your home loan eligibility well before applying.
What is home loan eligibility: Home loan eligibility determines your home loan carrying capacity. It tells how much amount you will get under home loan. Home loan eligibility is determined by many things such as age, income, type of employment, credit score, employer etc.
Understand what is home loan eligibility with an example
Mr. Aman is 40 years old and works in a multi national company in Delhi. His annual income is 10 lakh rupees. He wants to buy a property worth Rs 1 crore in Delhi. But the chances of their home loan application being rejected are very high. This is because there is a fixed scale of eligibility for lenders to approve any loan application. In this case, the ratio of the annual income of the king who wants loan is less than that. But this does not mean that Aman is not able to take a home loan. But they will not get so much home loan.
Another important eligibility criterion, which is required for your home loan approval or rejection, is your CIBIL score. If your CIBIL score is excellent then there are more chances of home loan approval.
You must be wondering what if our eligibility is low? Will we be able to take a loan or not? Will the approval be less?
Let us tell you how to increase home loan eligibility.
Factors to increase home loan eligibility:
– Good repair history
– Fixed source of income
– CIBIL Score +750
– Working spouse
– A co-applicant
– A co-borrower
– Other sources of income other than your salary
– Low debt utilization ratio
Tips to increase your home loan eligibility
Add your wife’s name as a co-applicant: Adding your working wife as a co-applicant can increase your home loan eligibility. By doing this you will get more home loan than the lender.
The co-applicant can be anyone. They can also be your wife / husband, family members or siblings. Adding a co-applicant increases the ability to bear the EMI and the lender feels more secure to lend. Many lenders are willing to give loans even at low rates.
By adding another source of income: You can also add another source of income to increase your home loan eligibility. In this, you can add your tenancy income, part time business, rent from equipment, forms, shares etc. as a source of other income. Adding any of these to your fixed income reflects your good financial health. Therefore, lenders find it safer to lend you more loan amount.
Improve your CIBIL score
The CIBIL score is an important criterion that decides whether your loan application will be approved or canceled. This is an important factor, which determines the eligibility of your home loan and the amount sanctioned for the loan.
If your credit score is 750 then it is considered good. This is a proof of your credibility. Whose CIBIL is good, lenders do not feel risk in giving them home loan. Good CIBIL means that you have a good repayment history.
If you are thinking about taking a home loan, first find out your CIBIL score. If it is less then take steps to improve it.
Pay off your previous debts: By repaying the previous loan, not only will your credit score become stronger but your credit utilization ratio will also decrease. This will increase your home loan eligibility. Apart from this, through some savings and investments, you can also increase home loan eligibility.
How to increase your home loan eligibility
– Pay off your credit card debt.
– Fill your bills without any lapse and pay your EMI on time.
– Check your credit score every 6 months.
– Add parents or wife-husband as co-applicants in your home loan.
– Choose a longer repayment period.
– Announce other sources of income such as returns from investment etc.
– Choose a good real estate project of a well-known builder.