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With RBI announcing cut in repo rates, Home loans are set to be cheaper. If you are worried about your home loan eligibility, read to find out five ways of maximizing your loan eligibility. Banks usually calculate the loan
eligibility applying Fixed Obligations to Income Ratio (FOIR). On
the prudent side, many banks restrict FOIR to a maximum 45-50 per
cent of monthly income i.e. your fixed outgoing expenses (including
Equated Monthly installments - EMIs on the proposed home loan)
should not exceed half your income. For instance Vijay Chauhan, 28
year old engineer, earns a monthly income of Rs 50,000 and he is
paying an EMI for his car of Rs 8000 per month and no other fixed
outgoing expenses. Hence a bank would typically consider Vijay
eligible for a loan who's EMI does not exceed Rs17,000 per month
making him eligible for a loan of Rs.14,00,000/- In a city like
Bombay, for Rs.14,00,000, Vijay will barely be able to afford
garage space. What Vijay needs to do is increase his loan
5 Ways to increase loan eligibility
Join hands with your better half - If
your spouse is also earning, the income of your spouse can be
combined and you could applied jointly for the loan. One can also
club incomes with a parent and take a joint home loan.
Clear all previous balance - Since your
eligibility is a function of your fixed monthly expenses, you could
repay any previous loan to increase your eligibility.
Go in for a longer tenure loan - A longer
tenure loan will increase the amount that you are eligible to
borrow. Though this is not advisable since it increases the total
interest that you will pay over the years.
Have an attractive CIBIL Score
- Banks usually prefer customers with a really high
CIBIL Score and they might be able to stretch the limit of your
loan requirements if you demonstrate that you are a financially
disciplined customers. So, make sure you always pay your bills on
time and be part of that exclusive 800 + CIBIL Score club.
Bank on relationships - If you have a
long standing relationship with the bank, you may be able to
convince them about the increase in future income. Also if you work
for a large corporation, like the Tatas or a MNC, the bank may give
you preferential terms including higher loan eligibility.
We, at CreditVidya, believe in empowering you. Because we believe that knowledge is not only power but also gives you a sense of belonging. We believe in supporting the consumers by not being their crutch but as catalysts and enablers.
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