Many people have dreams of owning a house. The cost of properties has been on the rise not just in metro cities, but also in other cities across India. The average market price of a 1 BHK house in Bengaluru is around Rs 35 Lakh and in Mumbai, it’s much more.
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The common man cannot afford to buy a house at these prices and depends on home loans. Do you think you are eligible for a home loan? Not necessarily. You may be eligible but, check how much you are eligible for. The following are the ways to enhance your home loan eligibility:
If you are already servicing existing debt, this may have an adverse impact on eligibility for a fresh loan as banks evaluate eligibility based on the debt-to-income ratio. The debt-to-income ratio is defined as the percentage of the overall monthly income to loans like car loan EMIs, personal loans EMIs and so on. This ratio can be improved by clearing these loans. Banks issue a no due certificate if there are no pending dues against you. This certificate has to be produced while applying for a home loan.
Many borrowers are familiar with the term ‘Credit Score.’ This refers to the ability of a person to service loans. The credit score has to be good or excellent to get the best offers from banks and NBFCs vis-à-vis interest rates. Check credit score and credit report free of cost on IndianMoney.com. Use online portals to check it within a few minutes. If it is average or poor, enhance it using the following tips:
Add co-applicants while availing home loans. Immediate family members are considered for joint home loan applications. Adding co-applicants is an added benefit, especially for older applicants. Banks sanction a higher home loan amount, if the co-applicant has a good credit score and monthly income. It is the easiest way to improve home loan eligibility. With the completion of each financial year, both the primary loan applicant and the co-applicant get an IT certificate used to claim home loan tax benefits.
See Also: Home Loan Interest Rates Rising
Home loans are long-term in nature. Though younger people get them sanctioned easily, the issue is they struggle to repay higher EMIs at a later stage. To be safe, opt for a step up home loan in which you have lower EMIs in the initial years and higher EMIs during the later years. Step up home loans increase eligibility criteria by 20% according to the experts in the industry.
Show additional income. Let’s say you have additional income sources like income from business, rental income and so on. Show this income to banks as they evaluate the ratio of the fixed liability of the borrower to income level. The additional income boosts home loan eligibility criteria.
Avoid changing jobs frequently. Stay at the current company for at least two years. Finalize the bank as soon as possible. Build a relationship with your bank as this helps get the home loan sanctioned.
See Also: Tips For Home Loan EMI Repayment
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