The home loan market grew by 32% CAGR between FY17 and FY21, primarily due to the affordable interest rates and reduced real estate prices in some cities. Besides, this has been possible due to RBI maintaining its accommodative stance in 2021, with the current repo rate remaining at 4%, which, in turn, has made housing accessible.
However, availing of a home loan is not a cakewalk as it may seem. The entire process requires diligent research and a complete understanding of the loan. Along with that, one needs to meet the home loan eligibility criteria to qualify.
Borrowers can also improve on their current eligibility by following a few tips.
Top 6 ways to boost your eligibility criteria
Many a time, potential buyers have not been able to avail of a home loan due to their inability to meet the eligibility criteria. Hence, besides knowing the home loan eligibility criteria, applicants must know tips to enhance it.
Improve the CIBIL score
One of the primary factors that decide an individual’s eligibility criteria is the CIBIL score for a home loan. A CIBIL score reflects the creditworthiness of a borrower. Hence, one must maintain a CIBIL score of 750 or above as that serves as a potent indicator of their attitude towards managing a loan.
Show additional income sources
Showing additional income sources can improve one eligibility to secure a loan. Hence, borrowers must show other additional income sources such as rental income, income from a part-time business, investments, etc. It will help them to surpass the monthly income parameter.
Apply with a co-applicant
To improve the chances of getting the home loan application granted, individuals may consider taking a joint loan, preferable with a spouse, children, sibling, or parent with a good credit score and a stable income. Moreover, adding a female co-applicant can result in lower interest rates in some cases.
Opt for a longer repayment tenor
Individuals can opt for a longer repayment tenor as that increases the chances of receiving loan approval. Besides, a longer home loan tenor tends to decrease the monthly payment burden of an applicant, making it more convenient to manage debt.
Moreover, individuals can use an online home loan calculator to compute the installments to be paid.
Clear out all existing debts
Applicants must pay off their existing loans before applying for a new home loan. Furthermore, a lender considers the current dues of borrowers before approving the loan. Hence, applicants must clear their existing loans and obtain a NOC which should be updated to reflect on their credit score. This will improve their debt-to-income ratio and help them to apply for a housing loan without any hassle.
Make a higher down payment
Another convenient way to increase the eligibility is by making a higher down payment. Doing so will lower the total loan burden, which will help borrowers to manage their debt better. Repaying diligently can also make one eligible for a home loan balance transfer and enjoy better terms.
Besides knowing the tips to improve home loan eligibility, one should also learn the criteria he/she needs to meet, and prepare accordingly.
What is home loan eligibility?
Following are the home loan eligibility criteria that most financial institutions consider before sanctioning a housing loan application:
- Age limit- 23-70 years, depending on the financial institution
- CIBIL score- above 750
- Employed- self-employed or salaried individuals
- Nationality- Indian resident
- Salaried professionals work experience-3 years
- Business continuity of self-employed individuals- 5 years
- Monthly income- Depends on an applicant’s city of residence
Meeting these eligibility parameters is essential to apply for housing credit. However, the application process of a housing loan has been simplified owing to pre-approved offers. Leading financial institutions are extending this facility to their current customers. These offers are available on financial products like home loans, loans against property, etc. Intending borrowers can check their pre-approved offers by entering the contact details.
Potential borrowers know the importance of the home loan eligibility criteria and how to improve them. However, they must disclose the correct information while applying for the home loan to void facing any legal implications.