A lot of home loans are available in the market, which take you a step ahead in your efforts of getting the home you always wanted. But, before applying for a home loan you need to raise your home loan eligibility as it makes securing a home loan easier.
What is a home loan and what makes you eligible for one?
A home loan is different from other loan processes as it involves larger funds and is spread over longer periods. However, an application for a home loan will only be accepted if you’re eligible as per the financing institution’s requirements.
Home loan eligibility, simply put, is a measure of your financial status and repaying capability. Your eligibility for a loan does not simply depend on your pay scale. There are a number of other factors that will be taken into consideration including your monthly salary, your age, credit ratings and your employer, among others.
There are different ways by which you can increase your eligibility and get the loan you desire. Some of the steps that you can take to better your chances at securing a home loan are
1.Go for a loan with a longer repayment period
When deciding about the loan tenure, choose a longer time period. This will assure lenders that you’re committing towards repaying your loan over a longer time frame, which in the long run is beneficial for them. This might also help you raise a higher home loan amount than before.
You can employ the help of a home loan EMI calculator to get an idea of your eligibility and the maximum loan amount you can secure. This will also help you determine the ideal time period in which you can clear off the loan amount.
2. Taking care of your existing loans
This is especially applicable to individuals who already have existing loans and are in the last stage of repayment. Prior to applying for a home loan, pay off your existing loans as it will help you get a better credit rating. By clearing off your existing debt, you will also be able to prove that you have sufficient finances to pay the monthly installments of your new loan.
If it’s not possible to pay them off, decrease the EMI amounts, or extend the repayment period. However, this might not be very helpful because financial institutions are more concerned about your existing debts than how you’re going to clear them.
3. Mention the extra incentives, occasional bonuses, and other sources of income
As an employee, you might be rewarded with festive bonuses, incentives, or perks by your employer. Mentioning this as a part of your net income will increase your chances of raising a higher loan amount.
If you’ve other sources of income like rental apartments, fixed deposits, or other businesses, then listing them will also add to your home loan eligibility, thus helping you get your loan approved.
4. Include your spouse or parents as loan applicants
A working spouse or parent can also be included as loan applicants. Involving them means more disposable income and financial stability on your part. No matter whom you include as a co-applicant, ensure that they have relevant documents that support their income.
Taking these steps will go a long way in increasing your eligibility and securing a home loan. Follow the above-mentioned steps to assure the lending institution that you have the ability to repay your loan with minimal hassles.
Photo: Flickr: GotCredit
You should pay up your previous loans first to get a clean record.