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How to increase your Home Loan eligibility?

The decision of buying a house requires several resources and planning. You try to reduce your expenses, focus on saving money, and fulfil only essential requirements. Thankfully, there is no need to compromise too much. With an increase in home buyers these days, all banks and financial institutions are now offering a Home Loan to fund it.

Before you apply for the loan, you need to check Home Loan eligibility. Based on the loan criteria, the lender assesses your credibility and capacity to repay the loan amount within an agreed period. You borrow the maximum loan amount based on your current income source, repayment capacity, age, credit score, and many others. However, follow some tips to increase the chances of loan approval:

Clear all existing loans
Before applying for any loan, ensure to clear the previous loan dues. A lender assesses your outstanding dues before sanctioning your Housing Loan. Before seeking any scheme, make sure to clear and close your entire existing loan, collect the no-due certificate, and update your CIBIL score.

Extend your loan tenure
Use the Home Loan eligibility calculator for the appropriate loan amount. You pay it in equated monthly instalments throughout the loan tenure. If you choose longer-term, you pay lower EMIs monthly, which suits all middle and lower-middle-income applicants. You get higher loan amount, which means you pay higher interest to the lender.

Maintain a FOIR below 40%
Fixed Obligation to Income Ratio (FOIR) is essential for determining Home Loan eligibility. It is a part of your current income source used for loan repayment. The higher the FOIR, the lower are the chances for loan eligibility. Therefore, try to limit it to up to 40% to increase the chances of loan approval.

Maintain a strong credit score
Many lenders consider your credit report to measure your repayment behaviour and mark your risk potential accordingly. The CIBIL score measures your capability to repay the loan amount within an agreed tenure. It also indicates that you are a responsible borrower. Always maintain a credit score above 750 to increase your loan eligibility and reduce the Home Loan interest rate.

Additional income sources
Consider other additional income such as rental income, interest earned from fixed deposits, any bonus amount you have received from your employer, or extra income earned as part of your freelancing work. It helps you plan your finances and repay the loan on time. All these factors are responsible for enhancing your Housing Loan eligibility.

Conclusion
During the loan approval process, ensure to disclose the correct information in your application. Research lenders to know the market rate and compare the schemes to suit your budget. Several tools are available online to ease the process and provide quick and accurate results.

https://www.bankofbaroda.in/home-loan-interest-loan.htm