Home Loan Eligibility: 6 Tips to Increase Housing Loan Eligibility

If you look at the NHB RESIDEX , you may see that in the last 10 years, housing prices have increased by around 50% in some cities. Thus, it is natural for you to want to secure as much funding as possible through Home Loans.Your income is an important factor in determining the amount of home loan you get. Hence, low disposable income can make it difficult to get the desired funding to buy your dream home.Your income is not the only factor a lender will consider when going through your loan application. Various factors, such as your CIBIL score, can influence this decision. This article discusses six steps to increase your Home Loan amount or boost your Home Loan application.

Home Loan eligibility represents whether you qualify for a Home Loan and how much Home Loan you can get. Lenders do not offer Home Loans for the full property value. If the lender believes you have a good capacity to repay and you are a responsible borrower, the ratio of Home Loan to property value will be high and vice versa. Lenders consider factors such as age, income, and CIBIL score when determining an applicant's Home Loan eligibility.

1. Income

Lenders consider applicants with high incomes safe to lend to because they face a lower risk of emergencies like job loss, medical problems, or sudden increases in living expenses that could impact their ability to repay the loan. Take a look at Home Loan eligibility calculator to understand how much of a Home Loan amount you can avail of depending on your current income.

2. Credit score

credit score is a three-digit number, which ranges from 300 to 900, and is calculated on your credit history. It helps lenders understand how responsible you are with the loans you take. The higher your CIBIL score, the better.

3. Number of sources of income

Unfortunately, you might suffer from a job loss or crisis at your business. If you have multiple sources of income and even if one of your income sources suffers, you can earn enough money to meet your expenses through other sources, allowing you to keep repaying your loans.

4. Tenure

When you take a loan with a longer tenure, you have more time to repay your debt. It also makes your EMIs lower but can increase the interest you pay.

5. Existing EMIs

If you already have a lot of EMIs, taking on another loan might make it difficult for you to repay all your debt.

6. Your age

When you are young, you can take a loan with a long tenure. You are more likely to repay because loans with long tenures have smaller EMI amounts. Lenders cap the age of Home Loan applicants to 60 years.If you are a Non-resident Indian (NRI) considering a Home Loan in India, take a look at this article.

It is daunting to apply for a Home Loan, especially if you are new to the Home Loan scenario. However, we are here to explain all the key terminology related to Home Loans and how to get the best loans.

1. Add a co-applicant While registering for a Home Loan, you can add a co-applicant, which will then be a joint responsibility of both applicants. Here, the bank will consider both applicants' incomes and credit histories. Thus, you can increase your Home Loan amount by adding a co-applicant.Also read: Who Can Be A Co-applicant For a Home Loan?
2. Go for a longer tenure When you take a Home Loan with a long tenure, your EMIs decrease as the principal amount gets distributed over several months. It helps reduce your strain and makes you more likely to repay. A lender will probably increase your Home Loan amount if you opt for a longer loan tenure.
3. Improve your credit score As mentioned earlier, credit scores or CIBIL scores help a lender understand how responsible you are with debt. They are calculated based on your credit history, i.e., a record of your EMIs and Credit Card bills. By paying your debt on time over one to three years, you can considerably increase the Home Loan amount you can get.Also read: Why is Credit Score Important for a Home Loan?
4. Repay your loans By repaying your existing loans, the amount of money you have to set aside for EMIs goes down, freeing your capacity for a higher Home Loan EMI. Keep your overall EMIs lower than 40% of your total monthly income. Your repayment capacity will be limited if your EMIs are higher before taking a Home Loan. Thus, you can increase your Home Loan amount by repaying your existing loans.
5. Opt for a higher down payment When you take a Home Loan, you pay a percentage of the property value as a down payment to the seller or construction company. By going for a higher down payment, the principal amount of your Home Loan would go down. As the principal amount goes down, your EMIs will also go down. Thus, going for a higher down payment would later make it easier for you to repay the Home Loan. As a result, lenders would be more likely to increase the Home Loan amount.
6. Go for a Home Loan top-up Once you have taken a Home Loan, you can apply for a Home Loan top-up . However, to do this, paying the original Home Loan EMIs on time is essential. Home Loan top-ups are a way to increase your total Home Loan amount after the original loan has been sanctioned. There are no restrictions on using the funds from a Home Loan top-up. You can use these funds for home-related purposes, such as renovations and expansion of the house, or for a vacation, paying for your children’s education, or buying a vehicle.

Also read: Low CIBIL Score? Don’t Worry; a Home Loan Is Still Possible

• When a lender is deciding how much of a Home Loan they can provide you, they will try to estimate how much you can pay back. To increase your Home Loan amount, you can take direct measures like increasing the tenure of the Home Loan and increasing the Home Loan down payment amount.
• Both measures would make it easier for you to repay the Home Loan and make it easier for the lender to give you more funds as part of the Home Loan.
• You can also try improving your CIBIL score by paying back your EMIs and Credit Card bills on time. Reducing your overall debt can also improve your chances of getting a higher loan amount.
• Before applying for the Home Loan of your choice, check the stamp duty and registration charges , as they may vary with your loan amount.