Ways to Increase Home Loan Eligibility

    By RupeeTalk

    The recent months in India have witnessed drastic change on home loan interest rates in the market. Consequently, the soaring interest rate has correspondingly influenced home loan eligibility requirements for the borrowers in the country. This has prompted loan consumers to reconsider their options in order to qualify for the new eligibility criteria.

    The article features some ways by which borrowers can increase their home loan eligibility.

    One of the best methods to increase home loan eligibility is to opt for the loan for maximum tenure. Let us take an example to lend more gravity on this prospect. Suppose A earns a monthly salary of Rs 60,000 and his total monthly expenditure amounts to Rs 35,000. Understandably, A will repay his loan out of his savings as calculated out of the total monthly income.

    Now, let us study over the interest rate to estimate the required EMI. We deduce that calculation of loan amount of Rs 1 lakh with an interest rate of 12.5% under the loan tenure of 15 year results in Rs 1,232.5. Based on the calculation, we can say that A is eligible to housing finance for up to Rs 20.3 lakh.

    Now, if A increases his loan tenure to 20 years on the same amount and at the same interest rate (i.e. 12.5%), his total EMI will amount to Rs 1,136 after calculation. Thus, an increase to loan tenure consequently enhances A’s home loan eligibility to Rs 22 lakh.

    Generally, all the banks or housing finance companies offer housing finance with maximum tenure of 20 years. Other than the repayment period, borrowers should consider rate of interest. Since the rate of interest on housing finance differs from bank to bank, borrowers need to explore and study the market scrupulously to get familiar with what other banks or housing finance companies lend.

    Thereafter, borrowers should ensure what to choose between floating and fixed interest rate on home loan. Currently, floating rate between 11.5-13% on housing finance is available in the marketplace.

    Borrowers should ensure not to keep outstanding balances of any previous bank. Bad credit score influences your repayment capacity and the bank can charge greater interest rate on the home loan. Having a clean credit score can increase your eligibility to a greater extent. Other than credit score, you can also club income from kindred like spouse/parents/children in order to increase eligibility.

    At last, don’t misinform bank or hold off important personal details pertaining to housing finance. Doing so may cause cancellation of your loan application or the bank won't consider you an eligible borrower for housing finance.

    Home loan is essential but you can’t avail it until you stand qualified under bank’s home loan eligibility criteria. There are some vital points to consider and borrowers should follow them to crack the code of home loan eligibility.



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