5 Tips To Increase Your Home Loan Eligibility


Following the liberalization of the Indian economy, opting for home loans have become a norm. Seeing the rising demand for the home loans, being eligible for a home loan has become a major question which many people don’t have an answer to.

In order to be eligible for a home loan is altogether a different ball game. Eligibility is indeed a tricky process as the lenders take into consideration your assets, income, and current liabilities. If the loan requirement is slightly higher than what you are eligible for, then small changes in the way you project yourself (as an applicant) can really come handy in increasing your eligibility. So, if you are looking to increase your home loan eligibility, here is how you can do it.

#1. Increase The Loan Term

One of the oldest methods to increase your home loan eligibility is to choose a higher loan term. The key reason behind this is the decrease in the EMI payment with the increase in the term. In spite of the high term, both the principal amount and interest rate will stay intact in this option. The loan eligibility will be naturally elevated accounting to low EMI, thus increasing your ability to pay.

#2. Repaying Other Pending Loans

If you have pending loans such as car loan or personal loan, then it can affect your home loan eligibility. As per the industry standards, if you have more than 19 existing unpaid loans, it does affect your loan eligibility. In such a situation, you can either prepay the loan in parts or make a full payment and increase the odds of your loan eligibility. For instance, if you are having let us say 15 pending loans, then you can approach HFC (Housing Finance Corporations) with a clean record after making a prepayment.

#3. Clubbing Different Incomes

You can also increase your eligibility by clubbing the income of your father, son, spouse, and mother. Let me explain this with the help of an example. Let us assume, the loan eligibility for an individual is Rs. 1,000,00 based on his income for certain criteria, but the anticipated loan amounts to Rs. 2,000,00.

Let us assume that the individual’s spouse is also earning the same annual income. In this case, the individual can apply for the home loan by clubbing the income of both of them. So, with the clubbing of the couple’s income, the loan eligibility is increased.

#4. Go For Step-up Loan

Another way to increase your home loan eligibility is to take a step-up loan. In simple terms, in a step-up loan, you will have to pay low EMI in the initial years and increased amounts in the second year of the home loan. For instance – if you have taken a home loan for a 20-year term at 7.5% amounting to Rs. 1,000,000, you will have to pay an EMI of Rs. 6,760 for the first two years and Rs. 8,340 for the rest of the term. Low EMI in the initial years is generally considered by housing finance corporations for the calculation of loan eligibility.

#5. Keep A Track Of Your Credit Score

When it comes to a home loan, your credit score plays a pivotal role. It is advisable to check your credit score six months before applying for the home loan and make sure the details of the loan should be verified as well.

You have to ensure that all your loan details are accurate. With a bad credit score, you cannot expect to get a home loan. Make sure you have thoroughly checked all the information in the credit report and if you come across any unusual record, make sure you have rectified it immediately with your respective banker. If your credit score is less, make your best efforts to improve your score.

About The Author:

Hi, my name is Ankita Dixit. I started writing from young age and most of my writing skills and knowledge are self taught. Currently, I am working as a professional writer at Paisa.co. I have write on various topics including travel, motivation, finance, technology, credit cards, insurance and entrepreneurship etc.