What to consider increasing your home loan eligibility?
LTV is a key factor in calculation of eligibility. Banks finance only up to 70-80% of the property value as evaluated by the bank’s evaluator and the rest has to be arranged by you. There is an option to sanction an in-principle amount, which helps to know the amount a bank would be able to give out before you choose the property.
Consider the following:
- Clubbing income – Income of your spouse can be considered if you apply for a joint loan.
- Increasing Tenure – When EMIs are high, eligibility will become less. The tenure and EMI are inversely proportional. So, opt for a longer tenure. Usually banks offer a maximum of 20-30 years tenure.
- Additional Income – Your consistent additional incomes like rental income qualify. Expected rental income from the property purchasing, performance linked pay can be considered to enhance your loan eligibility.
- Step-up loans – A step-up loan is a loan wherein an individual pays a lower EMI during the initial years and the same is enhanced periodically on conditions put by the banks. (As it is expected that with time salary will hike).
- Pre-closure of Existing Loans – Outstanding loans like car loans or personal loans may reduce one’s loan eligibility. As per norms, only existing loans with over 12 unpaid installments are taken into account while computing home loan eligibility. So, prepaying the existing loans in full or part will help.
- Employer-Bank relationship – A lesser interest rate will naturally increase your eligibility. Check with the banks if there are any schemes running with your employer. Banks usually categorize companies into A,B,C based on company profiles and run different schemes like special interest rates, processing fee waiver etc. People working in MNCs are benefited out of this usually.
And lastly, remember that too many loans would restrict your credit worthiness. Make sure your credit score in always good. Diligent repayments keep you out of debt traps and will also boost your credit worthiness.
