With house prices rising at an average annual rate of 8.5% in the last year, more individuals are looking to avail housing loans to invest in real estate.
Home loans come with a number of benefits like lower interest rates, tax benefits, longer tenor, etc. making it one of the most advantageous credits to avail. But to avail said loan, an individual must comply with certain home loan eligibility criteria.
There are several factors that determine your home loan eligibility like your age, work experience, income, etc. To become eligible, it is also crucial to apply for the right loan amount. One of the easiest ways to determine the same is through a housing loan eligibility calculator.
What Is a Home Loan Eligibility Calculator and How to Use It?
A home loan eligibility calculator, as the name suggests, is an online tool that instantly helps to calculate your home loan eligibility.
The calculator requires certain parameters that help it to determine your loan eligibility. Some of them include:
- Your net monthly salary
- Loan tenor
- Existing EMIs
- Additional monthly income, etc.
By supplying the above information accurately, you can know the amount of loan you are eligible to avail. You can use the home loan eligibility calculator by financial institutions to calculate your loan amount.
Additionally, there are many offers brought to you NBFCs that makes it easier to avail housing loans. These offers are available on various financial products like home loans, as well as personal loans, business loans etc.
What Are the Other Eligibility Criteria to Avail a Home Loan?
After knowing the amount of loan you can avail you need to comply with other eligibility criteria to avail the loan such as –
- Age: You must be between the ages of 20 to 60 years of age as a salaried applicant or 24 to 60 years of age as a self-employed applicant.
- Employment: salaried individuals must be at their current organization of employment for a minimum of 3 years, and self-employed individuals must have 5 years of business experience to be eligible for the loan. You need to supply your salary slips as a part of the documents required for a home loan.
- Financial stability: You have a higher chance of availing the loan if you have good past financial records.
How Can You Increase Your Housing Loan Eligibility?
You can apply the following methods to improve your chances of availing the home loan with ease –
- Repay All Your Existing Loans
Your eligibility to avail a home loan will depend a lot on whether you have an existing loan. Your debt to income ratio is one of the factors that lenders assess to determine your eligibility.
Debt to income ratio is the ratio of your monthly income against your monthly liabilities such as existing loan EMIs, credit card dues, accommodation rent, etc. So, to increase your chances of availing a housing loan, you should ideally repay all your existing loans in advance.
- Opt For Loans Jointly
One of the best ways to increase your chances of availing a home loan is to apply jointly with a co-applicant, e.g. your spouse. In doing so, you can increase the total credit eligibility as the lender will pool the incomes of all applicants to determine repayment capacity. There are also other benefits of taking a joint home loan including tax benefits, ease of repayment, etc.
- Have an Additional Source of Income
Having an extra income from sources like a business or rent can help you increase your home loan eligibility. Therefore try to have some additional cash flow options for each month to increase your chances of availing the loan.
- Increase Your Cibil Score
Having a good CIBIL score is one of the most crucial home loan eligibility criteria. There are ways in which you can improve your CIBIL score and become more creditworthy. For instance –
- Pay your credit card dues and EMIs on time and in full
- Try to avoid loan settlements and defaults
- Try to maintain a low credit utilization ratio (20%-30%) on your credit card
- Do not apply for too many credits within a short span of time
You can use a housing loan eligibility calculator to gauge your eligibility to apply for a home loan. Also, by following the pointers mentioned above, you can improve your chances of availing a home loan.