Different Ways To Increase Home Loans Eligibility

Home loan interest rates have inched up to an alarming degree in the last few months. This in turn, has certainly affected the loan eligibility. In such a scenario, it becomes pertinent for borrowers to re-evaluate their options on account of the new eligibility norms. Given below are some ways of enhancing the housing loan eligibility.

1) Increase the home loan tenure
The elementary method of increasing the loan eligibility is by opting for a higher tenure. It is because the EMI (Equated Monthly Installment), which an individual has to pay, starts to decrease as the tenure increases. The reason being that other parameters, including, rate of interest and principal amount remain the same, despite the high tenure. However, the net interest outgo will increase with a rise in tenure. Since the individual is paying less EMI, his ‘ability to pay’ will automatically get increased.

2) Repay other outstanding loans
An individual with outstanding loans such as car loans or personal loans may face a problem as any due amount can negatively affect their home loan eligibility. According to industry standards, existing loans with more than 12 unpaid installments are taken into account while computation of home loan borrower’s eligibility. In such a situation, it becomes imperative to prepay in part/full their existing outstanding loans to make sure that their eligibility for the home loan remains unaffected.
For instance, if the home loan seeker has an outstanding car loan, where 15 EMIs remain to be paid, then he can prepay the same and approach the loan provider with a clean slate.

3) Clubbing of incomes
Loan eligibility can also enhanced by way of clubbing incomes of spouse and applying for a joint loan. A suitable illustration will shed a considerable light on the prospect. An individual earning Rs 80,000 per month narrows down to buy a housing loan. The loan eligibility, based on his income, works out to approximately Rs 80,000 for a given set of criteria. But he can also enhance his eligibility by clubbing income of his wife, who is earning a similar income. The eligibility in this case will be calculated on the clubbed income of both husband and wife thereby increasing the individual’s eligibility to the extent of the spouse’s income.

5) Perks
Salaried individuals should ensure that other variable sources of income such as performance-linked pay among others are taken into consideration while computation of income. This in turn means that the loan amounts they are eligible for, stand enhanced as well.
 

6) Never hurry your Way while applying for housing loan: Nowadays, various banks and housing finance institutions are offering a home loan with the repayment period of 20 years. Always carry out a well-planned research work and meticulously study the market to make the best use of what many banks and housing finance companies are willing to offer. Then, make a decision between floating and fixed interest rate on home loan, which largely based on personal preferences and knowledge about the both types.

7) Step-up home loans- Various banks and housing finance companies also give out 'step up' home loans. Simply put, under this loan, banks give out a higher loan amount to an individual than what he is eligible for on the assumption that the individual career prospects look very strong and in near future, he should be able to pay a higher EMI. During the initial years, an individual pays a lower EMI and the same is increased during the rest of the tenure.

As can be seen, there are varied ways to increase loan eligibility. However, enhancing the loan eligibility can have an impact on the financial planning. For instance, if an individual decides to prepay a current personal loan for the sake of becoming eligible for a higher loan amount, he might be faced with a cash crunch. Hence a detailed scrutinization of one’s financial standing is warranted before zeroing in on an inflated housing loan.