7 Ways to increase your Home Loan Eligibility

No doubt, buying a home is a huge decision. There are several factors to take into consideration, many of them related to finance. Once you have made the decision to buy a home, you have to look into your eligibility for a home loan – and this is a crucial first step to actually financing your dream home.Here are the important aspects banks look into when assessing your eligibility for a loan. Check where you fare on these and work towards improving your eligibility. It will mean the possibility of a higher loan amount:

• Good credit score of 700 and above. This is mandatory to be eligible for a home loan. If you already have a good credit score, then working to enhance it will not help your position in any way.
• Past loan repayment track record, if you have availed of one
• Current number of Non-EMI related credit you may have pending. This includes credit cards, loan against gold and overdraft facilities utilized
• Track record with you as guarantor for any loan taken by others

Tips to Increase your Home Loan EligibilityHere are some ways to increase your eligibility. Some may sound familiar and others will have you wondering why you did not think of it before.

1. Clear all Pre-Existing Loans: It is important that you start on a clean slate. If you have any outstanding loans, especially on your credit card, clear them. This will work towards enhancing your CIBIL credit score. Once you have no-dues certificates on hand, it takes around 30 to 45 days for banks to update information with CIBIL. Plan the clearing of your debts so that you have a good CIBIL score when you apply.
2. Check for Employer-Bank Relations: If your employer has a tie-up with a bank, usually for salary accounts, chances are you may be able to secure a lower rate of interest. This lower rate naturally increases your eligibility. Check with your employer on whether this is a benefit you may avail of.
3. Consider a Step-up Loan: Eligibility increases in this kind of a loan. The basic premise is that you pay a lower EMI to begin with and this goes progressively higher into the tenure of your loan. If you are sure of your financial status going forward, this may be an easy way to secure a home loan.
4. Consider Longer Tenures: Higher EMIs increases liability and brings down eligibility. If you opt for a longer tenure of loan, chances are you’re the strict norms for eligibility are also relaxed. This may be a good way of increasing your eligibility.
5. Pool in Additional Income: If you have other sources of income such as high-yielding fixed deposits or rentals from properties that you own, these may be used to show a higher, steady income, thus increasing your eligibility.
6. Apply with Your Spouse or Parents: Much in the same manner as the earlier point, you may consider applying for a loan along with your spouse. Pooling in your income enhances your eligibility to a large extent. The age of an applicant makes a small difference. Those in their late 20s and early 30s are preferred considering a home loan is a long term engagement. You may want to apply with your parents for a better chance.
7. Include Bonuses and Perks: Many employers offer a range of monetary perks to their employees. Do be sure to include all of these when making out your application. This can go towards enhancing your eligibility.

Take-Aways

• Work on improving your CIBIL score if it is below 700, as this will help enhance your eligibility for a home loan.
• Look into your financial track record to understand your position
• Explore avenues such as longer tenures, employer-bank relations and the inclusion of other means of income, when looking to enhance your eligibility.