Buying a dream home is usually a big financial commitment a lot of planning and adjustments in one’s budget and finances are required. Most of the time, your dream home budget will come out of your own wallet. It’s the point at which you must choose between abandoning your goal and applying for a home loan to fulfil your goal. It is recommended to verify your home loan eligibility before applying for a home loan so that you have a clear image of your eligibility.
When you apply for a home loan, the lender will evaluate your ability to repay the loan in a timely manner depending on the home loan eligibility criteria.
Home loan eligibility refers to the maximum loan amount you can get depending on factors such as your existing source of income, payment history, age, credit score, and other factors.
Below are some points which increase your home loan eligibility:
All existing loans must be paid off:
All of your previous ambiguous loans would have a negative impact on your home loan eligibility. Previous loan payments would have a significant impact on your home loan eligibility. Before approving your home loan, a lender will always assess your outstanding debts.
Before applying for a home loan, make sure you’ve paid off and cancelled all of your previous debts, secured a no-due certificate, and had your CIBIL credit score updated.
Build a strong credit report:
Any financial institution or bank that offers home loans checks at your credit report to assess your repayment history and categorise you as a high-risk or low-risk potential borrower. When it comes to approving your home loan, your CIBIL score is one of the most important considerations. Your CIBIL score is an indicator of your capacity to repay a loan within the specified period of time. Maintain a credit score of at least 750 (out of 900) to boost your home loan eligibility and to help you get a lower interest rate from the loan provider.
Extend the duration of your home loan:
Your home loan eligibility is decided by your capacity to repay the loan amount each month, which we refer to as equated monthly instalments (EMIs).
If you choose a longer loan term, you will have to pay lesser monthly EMIs, which is ideal for all middle and lower middle-class borrowers, and you will be eligible for a larger home loan amount to purchase your dream home for your family.
Maintain a FOIR of less than 40%:
The Fixed Obligation to Income Ratio (FOIR) is an important factor to consider when deciding loan eligibility. It is defined as the portion of your income that is currently being used to repay a loan. The higher the FOIR, the less likely you are to be approved for a loan. As a result, attempt to keep your FOIR below 40% to boost your chances of getting a loan. You can reduce your FOIR by enhancing your source of income or paying off all of your debts.
Extra Income Source:
If you don’t meet the house loan eligibility requirements, you can look into other sources of income, such as rental income, interest from fixed deposits, any incentives you’ve gotten from your company, or extra income obtained through freelancing. All of these sources of income will help you meet the requirements for a home loan to purchase your home.
Dealsofloan’s mission is to assist the large percentage of India’s low- and middle-income population by providing home loans, plot purchase and building loans, loan against property, and balance transfer, Home loan top up etc.
Visit our website dealsofloan.com to Check Your Home Loan Eligibility.