Everyone dreams of having their own home. The introduction of home loans has made this dream a reality. Home Loan eligibility is the maximum loan amount that you can get based on various factors such as current income, age, credit score, repayment capacity, etc. We have highlighted 5 tips to maximize your home loan eligibility.
- Clear all existing loans
If you have loans that remain uncleared, it would affect your home loan eligibility negatively. Always ensure that you have cleared all existing loans and collect no-due certificates as proof before applying for a home loan.
- Extend Your Home Loan Tenure
Your home loan eligibility is determined by your ability to repay the loan amount every month. This is known as EMI. If you decide to avail of a longer loan tenure, you would have to pay lower EMIs every month. However, a longer loan tenure also means that interest rates to the lender will be higher. This is not a cause for concern as a yearly increase in income and effective management of expenditures will be able to counteract this.
- Maintain a low FOIR
Fixed Obligation to Income Ratio (FOIR) is a part of your income currently being used for loan repayment. A higher FOIR lowers the chances of obtaining a home loan. Ideally, a FOIR of less than 40% is considered a good percentage for increasing the chances of a home loan. This can be achieved by obtaining a higher income.
- Maintain a good credit score
Home loan lenders and banks consider your credit score before offering any kind of loan. Based on your loan repayment history, you could be classified as a high-risk or low-risk potential home applicant. This is known as the CIBIL score. The maximum score a person can obtain is 900. It is necessary to achieve and maintain a score of 750 or greater to increase the chances of obtaining the loan.
- Choose a joint home loan
Opting for a joint home loan is another way of increasing your home loan eligibility. A joint home loan requires an immediate family member as a co-applicant. The co-applicant can be salaried, self-employed or a resident. Female co-applicants have the benefit of lower interest rates. Joint home loans are beneficial as both the main applicant’s and co-applicant’s income sources are considered by the lender in determining the eligibility criteria.
We hope that these 5 tips will help you in applying for a home loan. At Vridhi, we assist you every step of the way throughout your home loan application. We cannot wait to see you make your dream home a reality.