Since the festive quarter in 2020, residential property sales have maintained momentum due to affordable housing government schemes and low interest rates. Recent trends, like work from home, online education, webinars, video conferencing, etc., have further accentuated this urge for homeownership. Fulfilling this pent-up demand are HFCs in India with their feature-rich housing loans. Consumers can access high-value credit easily by meeting some pre-set home loan eligibility parameters.
- Compared to 2019, housing loan inquiries as of September 2020 were at 112%, as per TransUnion CIBIL.
- Close to 88% of the market share was accounted for by salaried loan applicants in 2020.
Home loans allow borrowers to buy properties in various price brackets. However, the credit approval initially depends on certain criteria which every applicant must fulfil. Some of these include –
- Age (self-employed) – Within 25 to 70 years.
- Age (salaried) – Within 23 to 62 years.
- For salaried, minimum work experience – 3 years.
- For self-employed, business vintage – 5 years.
- Minimum salary per month – Rs.25,000. This parameter depends largely on an applicant’s place of residence and a few other factors.
The better you qualify, the more are your chances of loan approval. Below are a few steps to increase your home loan eligibility.
- Provide an additional source of income
Your monthly income may be much higher than the minimum requirement. However, adding other sources of earning makes you more eligible, especially for a higher limit. These are additional income besides your net income per month, which assure lenders of your repayment capability and less probability of default. These also reflect your healthy financial condition.
Some of the additional sources can be rental, fixed deposits, business income, mutual fund dividends, etc.
- Co-borrow the credit with your spouse
If your spouse is working, availing a joint home loan with him/her as your co-applicant enhances your eligibility. The benefits include:
- Both of your incomes are considered to assess repayment capability.
- You can enjoy tax benefits on home loans
- Getting a co-applicant also allows borrowers to avail a higher loan amount.
- It increases your EMI affordability, thereby lowering your chances of default.
- You can plan for prepayment and become debt-free well ahead.
- Your lender may even offer a lowest home loan interest rate for an affordable cost of borrowing.
Besides spouse, you can co-apply with your mother, father, brother, sister, son, daughter, or any other family member.
- Reduce your financial obligations by paying off existing debts
Unlike earlier, lenders take note of EMIs of ongoing loans when considering eligibility for new credit. Borrowers must maintain a FOIR or Fixed Obligation to Income Ratio below 30% – 50% of their net salary. If your existing loan has a few EMIs left, opt for prepayment before availing fresh credit. It not only increases your home loan eligibility but also reduces the financial burden significantly. Note that defaulting on your loan EMIs can have several outcomes.
- Improve credit score
A loan application’s approval or rejection largely depends on credit score. This parameter shows if a borrower is financially responsible and can make timely repayments. On the range of 300 to 900, those having a CIBIL score above 750 qualify for housing loans easily.
To increase your eligibility, improve your credit score over time –
- Avoid applying for multiple loans at a time.
- Pay your dues and EMIs on time.
- Avoid defaulting on loans or credit card payments.
- Check your credit report for errors and rectify them immediately.
- Keep your credit utilisation ratio within 50%.
Apart from following these parameters, you can use a home loan eligibility calculator online. This tool displays the maximum loan amount an individual qualifies to apply. As a user, you need to provide the date of birth, income details, current obligations, etc., you can also check monthly outflows using a loan EMI calculator. Apply for a suitable amount accordingly.
What is the home loan application process?
The home loan procedure online becomes hassle-free once you qualify the eligibility parameters. You can fill up a loan application form online, available on your lender’s official website. Provide all information accurately and hand over the necessary documents to complete the process in a few steps.
Alternatively, if you are already a customer, seek customised pre-approved offers for instant approval from your current lender.
Housing finance companies in India bring pre-approved offers tailored for their existing customers. Pre-approved offers make the credit availing process not only simple but also less time-consuming. Such schemes are provided on a variety of financial products like home loans, loans against property, etc. You can check your pre-approved offer by submitting a few details online.
- With the increase in home sales, housing finance companies expect a 10% growth in FY22.
For prospective buyers, this time is ideal to invest in residential property as prices are reasonable now. Also, interest rates on housing loans are reasonable, with HFCs bringing lucrative features for borrowers. Before taking this investment plunge, however, ensure to enhance your home loan eligibility for instant approval.
Hence, it becomes imperative for home loan borrowers to understand the impact of unchanged repo rate on home loan interest rate. Those who service a home loan with a base rate should transfer to a repo-linked loan to reap the benefit of the current scenario.
