Adil Shetty, CEO, Bank Market Home loan is one of the largest associates, which helps people who buy a home for the first time with a simple term as well as buy a home with a long payment period. When you apply for home loan, the bank first checks your eligibility. Only if you meet its eligibility criteria, your loan application can be reached in the next phase.
There is a misconception in some people’s mind that if they have a good credit score, they are eligible to get a home loan automatically, but in reality, before accepting the application of credit score, home loan applications, there are several important parameters One of the only, not the only criteria. Loan applicants actually have trouble when their qualifications fall short in front of the bank’s norms.
In this article, we are going to tell about 5 important measures that can help you improve your home loan eligibility to buy your first home
1. Consider your earnings and debt repayment period
While examining your ability to repay your loan, banks look at your monthly income and try to understand that your earnings are sufficient to repay the loan during the loan period or not. Suppose, after completing all the obligations, your net income is less than the expected EMI of the loan, then the bank can refrain from giving you loans. EMI liability can be reduced by increasing the duration.
If the period is increased from 15 years to 25 years then the EMI liability decreases to 5385 rupees. In this way, you can easily complete the bank’s eligibility criteria by changing the duration. If your earnings increase in the future, then you can repay the loan by increasing the amount of EMI. Generally, there is no penalty for loan pre-closure.
2. Try to eliminate existing debt
While examining your loan repayment capacity, the bank deducts your existing EMI liability from your net income. Suppose your net income is Rs 50,000 and your EMI liability on your current loan is Rs 15,000. In this situation, the bank will count your loan repayment capacity of only Rs 35,000 (Rs 50,000 to minus 15,000). If your current loan balance is 1 year or even a few months,
It can have a negative effect on the eligibility of, Therefore, before taking a big loan like home loan, try to close all your existing loans so that you can easily meet the eligibility criteria according to the bank’s norms. It is always better to show the bank that you are more capable of repaying the loan than the required EMI.
3. Apply for a loan with a co-borrower
This is a way in which your loan is likely to be saved from being rejected. Your joint income with your co-borrower can fulfill the required income gap by a bank to give you a loan. A co-borrower may be your spouse or some other person. The bank will look at the joint ability of both the applicants to assess loan eligibility and in this way you will be able to easily get a loan.
4. Consider Step Up Loan
Some banks offer step-up loans. It has been specially designed for borrowers whose income is expected to grow in the near future, but those who are not able to pay much EMI at present. Under this loan, the borrower is asked to give fewer EMIs for initially few years and increase the EMI after assuming that the borrower’s income has increased after such period.
5. Try to include an additional income source
If your income is decreasing due to the eligibility of the loan, you can include another income source in your earnings to meet the bank’s eligibility criteria such as earnings on rent or fixed deposits. Interest or bonuses from employer You can also include income from freelance work to increase the income level.
Apart from the above mentioned measures, if you are buying the house for the first time, then you are also eligible for subsidy under the PMAY scheme of the Government of India. Under such schemes, you can get a subsidy of up to 2.3 lakhs, which will be directly deposited in your loan account and your qualifications will increase to that extent. You should also take care of some other important things like keeping your civil score at a high level. Keep the amount of money down payment and select the house according to your financial capacity.