Tips To Increase Your Eligibility For A Home Loan

Taking a loan for anything is a big decision, let alone one for your home. A house is one of the biggest investments you can make, and a home loan is an enormous financial commitment. Even before you look at potential homes you have to evaluate the costs from the actual structure to everything you’ll need to furnish it with. Then you need to evaluate your own earnings to determine what you can afford, and how much of the expenses need to be backed by a loan.

After all these careful calculations, it can be really disappointing when you don’t get the loan. This article will help you with tips to increase your eligibility and avoid getting your home loan application rejected.

So how is Home Loan eligibility calculated?

The primary factor that decides your home loan eligibility is your income. You’re more likely to get a loan if you’re a salaried employee than if you’re self-employed with uncertain sources of revenue. Your bank or lender will deduct your expenses like dependents and EMIs of other existing loans from your salary as stated on your payslip. This is the base on which the lender calculates the amount that you are eligible for. Usually, your loan can be up to 60 times the base, depending on the lender.

Improving your eligibility

There are some very simple ways of increasing your eligibility.

• Loan tenure: Since the amount you’re eligible will be loaned depending upon your capacity to repay it, increasing the time period of repayment can make you eligible for a larger amount. So when you’re taking out a loan, make sure you know exactly how much you need, and how long you can afford to pay the interest for. Then consult with your lender about an extension of tenure.

• Joint application: If you’re married, and your spouse is also earning, the two of you can combine your salaries in a joint application for the loan, which will increase your home loan eligibility. You could even involve other family members who are willing to support you by becoming a co-applicant, it doesn’t necessarily have to be your spouse.

• Pay off your existing loans: Before taking out a loan for your home, it makes sense to clear your existing one so that all your income isn’t diverted to your home loan’s repayment. Moreover, the fewer expenses on your income, the larger the amount you’re eligible for.

• Additional income: Make sure your lender is aware of your perks and bonuses and income from other sources like rented property, as all of this is taken into consideration before your eligibility is determined. Naturally, with more income sources, your capacity of repayment will be higher, and you’ll be eligible for a better loan.

Things to consider

Always be aware of your financial situation before you commit to a specific lender. Be certain that the policies of the home loan they’re offering suit your needs and your capacity to repay.

Make sure to plan for potential emergencies, so you won’t be strapped for cash and end up defaulting on a loan payment. Loan eligibility is calculated to ensure that you meet your expenses while repaying the loan amount, so remember to be upfront with your lender. Additionally, following these tips can help you increase your eligibility without compromising on your day to day needs.