As mandated by RBI, all home loans from 1st October 2019 will be linked to an external benchmark such as repo rate. Consequently, since the reduction of the repo rate by 40 basis points, there has been a significant increase in demand for home loans. To follow up with this heightened demand, borrowers can take note of the tips below to improve their home loan eligibility -
- Submit all essential documents –
Lenders determine an individual’s eligibility to avail a home loan based on his/her employment details, current financial standing, etc. Thus, borrowers need to submit all related documents, including their age and identity proof, to improve their housing loan eligibility.
- Eligibility parameters –
Borrowers should also check home loan eligibility parameters specified by a lending institution and try to meet all the conditions. Some of the basic requirements include age between 23 to 70 years, a regular source of income, and Indian citizenship.
Additionally, borrowers can also opt for tools like a home loan eligibility calculator to check the loan amount they are eligible for beforehand to enjoy fast approval for a home loan.
- Reduce FOIR –
FOIR or fixed obligation to income ratio is an essential parameter that lending institutions use to ascertain the repayment capability of a borrower. FOIR refers to the amount of an individual’s disposable income that goes towards repayment of fixed debts such as rent, loan EMI, etc. Consequently, a high FOIR suggests lower repayment capacity, which increases a borrower’s risk profile and impacts his/her home loan eligibility.
Apart from these tips, applicants should maintain a positive CIBIL score of 750 and above, which will increase their home loan eligibility. A high CIBIL score will also enable borrowers to negotiate with their lenders regarding favourable rates and terms.
