A dream home can be closer to reality if you live a financially disciplined life. All that it takes is to make smart moves at the right time in your life and career.
Life has offered us many types of comforts. One such comfort is having a home. This comfort can multiply if you own your home. After liberalisation of the Indian economy, home loans have become the norm to own a house. With demand rising for home loans, being eligible to buy your dream home is a big question which many people don't have an answer to.
A home loan is a boon for more than one reason. Being eligible to get a home loan is totally a different ball game. Eligibility is not a simple thing to assess. It is a complicated process; the lenders consider your current liabilities, assets and income. If your mortgage requirement is marginally higher than what you are eligible, small changes in the way you project yourself as applicant may help in increasing your eligibility. Here are the top seven tips to increase it:
1. Clear your existing loans
Look out for those nagging credit card loans or personal loans that you took a couple of years ago to purchase one of your fetishes that you are still repaying. This is clearly a red flag when a lender is trying to assess your eligibility.
Clear these loans, close these accounts, collect the loan closure or no-due certificate, keep it safe and ensure it is updated in your CIBIL credit score.
2. Variable pay
Make sure you keep a record of how much variable pay or perks you earn as part of your job. This record will help your potential lenders to consider while calculating your eligibility.
3. Rental income
Do you have a house in your hometown that is sitting idle? Lease it out. The rental that you earn from this house can be additional source of income, which can enhance your loan value.
4. Increase tenure
When you increase your home loan tenure, your eligibility can be increased. But please note that the banks do not increase it beyond 25 years.
5. Spouse earnings
If your spouse is also earning, then it is a good idea to do joint application for a home a loan. This increases the home loan eligibility dramatically. This also means that the liability of repaying the home loan is left to both.
6. Take your time
Before you apply for a home loan, pull out your CIBIL score. Look for errors, if you find any, raise a dispute and have a clean CIBIL report. Do not apply for a home loan with 10 different lenders to get a loan quickly. Shop around; enquire what kind of miscellaneous benefits the lenders are offering to their customers.
If you have a good CIBIL score, many lenders will be more than happy to offer you a home loan at competitive rates. Talk to an existing customer of the bank before you finalise on your lender. Settle with a lender who is giving you competent interest rates, easy repayment schedule and good services.
7. Consider step up loans
Step up loans are a good way to enhance eligibility for those in professions where one would struggle initially, but the possibility of higher rewards are bright as they establish themselves like a doctor or a chartered accountant. Under this scheme, banks offer loan at lower EMIs in the initial years and gradually increase the EMI as you start repaying the loan.
The author is a credit expert with 10 years of experience in personal finance and consumer banking industry and another 7 years in credit bureau sector. Rajiv was instrumental in setting up India's first credit bureau, Credit Information Bureau (India) Limited (CIBIL). He has also worked with Citibank, Canara Bank, HDFC Bank, IDBI Bank and Experian in various capacities.