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How to Increase Home Loan Eligibility

By Finserv MARKETS - Feb 26,2019
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How to Increase Home Loan Eligibility

Owning a home is a common pursuit for many! And this has become even more achievable with steady income jobs and a multitude of saving schemes that help you plan and grown your savings, efficiently. Many consumers buy a house with the help of home loans as it is quite difficult to rely entirely on your savings. The demand for it has increased over the years. Today the eligibility for home loan is a crucial factor. Two aspects define home loan eligibility and the amount that will be lent to you. Firstly, the bank is concerned with the market value of the home being purchased or given for mortgage. Secondly, to ensure the loan is duly paid, the it will be offered as per your income. Your income will determine your capacity to repay the loan.

Requirements to Apply for Home Loan-

Home Loan Eligibility Criteria

  • You must be a citizen residing in India.
  • You must be a salaried individual with at least 3 years of experience.
  • Salaried individuals between the age of 23 to 62 are eligible and can apply for a Home Loan.
  • Home loan amount you can apply for – Minimum – 10 Lakh and maximum – 3.5 Crore.

Home Loan Documents Required

  • Aadhar Card/Passport/Driving License.
  • Address Proof.
  • Identity Proof.
  • Form 16 or your latest salary slip.
  • 3 months bank account statement.

In recent times, the real estate prices have increased making the borrower’s income the main deciding factor for home loan eligibility. Therefore, the lender would consider the surplus money left after daily expenditure when structuring the home loan EMI pay out. Having said this, around 50% to 60 % of your income is taken into account for daily expenditure and the remaining 40% to 50 % of your income will be considered for the EMI. Applicants who check home loan eligibility using home loan eligibility calculator and do not meet the income eligibility criteria for home loan can do so through legal ways mentioned below.

Authorized relatives can join as co-borrowers-

You can include approved relatives as co-borrowers for the loan and apply for a joint home loan to improve your eligibility and funds. All banks permit parents, spouse and children as co-borrowers. Majority of the banks do not allow brothers and sisters or even married daughters as co-borrowers to avoid succession disputes in future. It’s not mandatory for the relative or co-borrower to own the property. But all co-owners of the property must participate as co-borrowers of the loan. The co-borrower need not repay it. This will be required only when the primary borrower has been unable to repay the loan.

Apply for a home loan with the longest tenure-

Unlike home loan, a personal loan or automobile loan for the same amount will have a longer payment tenure and therefore, have smaller monthly equated instalment. The general tenure for a home loan is 20 years. But you can always opt for the longest payment tenure offered by the bank. The longer tenure would mean smaller and comfortable EMIs.

As per RBI and housing finance by National Housing Bank, borrowers won’t be charged for prepayment penalty for early part or full repayment of a home loan. Today, these loans fall under this floating rate interest structure. So, if achievable in future, you can always repay the entire loan before the actual tenure without prepayment charges. For example, based on your age, a bank offers loan with tenure of 40 years. If 1 lakh is the monthly income and if the interest is 9%, the home loan eligibility increases from Rs. 31.58 lakhs with 10-year tenure to Rs. 44.46 lakhs with 20-year tenure.

Repay your existing loans-

Clearing your existing loans before applying for a home loan would be a smart decision as your existing outstanding determines your home loan eligibility. Before approving it, the lender will always check if you are currently paying EMI towards an on-going loan. For borrowers with existing loan outstanding, the eligibility reduces. And it further reduces if the balance tenure is as short as 12 months. For example, if 1 lakh is the monthly income, 50% of the income (Rs. 50,000) will be considered to derive eligible loan amount. But if you have an existing loan with an EMI of Rs.10000, the bank will remove this amount from your eligible loan amount. Instead, if this existing loan was going to end within a year, it’s better to clear outstanding amount rather than reduce eligible loan amount.

To sum it up, if the Bajaj Finserv Home Loan eligibility does not meet your actual requirement, it can always be boosted with the options given above. Go ahead and buy your dream house today!

Also, read about prepayment of home loan.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522