Credit consumption in India has witnessed a radical shift in the past decade or so on two fronts- the age of the borrower and the source of credit. It is especially true for the housing loan segment, where 40% of the borrowers are now under the age of 35. More significantly, as much as 9% of the borrowing population includes individuals under the age of 25. Furthermore, the source of credit has also shifted towards NBFCs who now account for 44% of all home loans disbursed in India.
Key Stats at a Glance
- 9.8% – NPA for HFCs.
- 11.9% – NPA for PSBs.
- 8.59 Lakh – High-value loan (above Rs. 25 Lakh) borrowers.
- 13.32 Lakh – Low-value loan (below Rs. 10 Lakh) borrowers.
It points to an interesting trend in the Indian economy. With easy to meet criteria for home loan eligibility, more young individuals are now purchasing residential properties via such credits. It was not possible a few decades ago when home loans were practically unheard of. These days, home loans are a prevalent financial tool availed by prospective home buyers.
How to Increase Home Loan Eligibility?
Home loan eligibility is directly LTV offered to the borrower against the to-be-purchased and mortgaged property. LTV or Loan to Value refers to the percentage of the current property market price sanctioned as the loan amount as per the eligibility or creditworthiness of the borrower. A borrower with a high CIBIL score can avail a loan with an LTV as high as 75% of the property’s base value.
However, not all borrowers are eligible for the high LTV as lenders inspect multiple factors for home loan eligibility other than just the CIBIL score.
As a borrower, it is your prerogative to take these factors into consideration and improve your chances of availing a higher loan amount. Here’s what you can do.
- Pay off Existing Debts First
One of the first determinants considered in the case of home loan eligibility is the debt-to-income ratio of the prospective borrower. It essentially denotes the percentage of your total earnings against the total debt amount that you have to meet as expenses each month. If it crosses 50%, lenders are generally disinclined to extend credit.
Therefore, you should ideally repay any and all of your existing debts before applying for a home loan. It will improve your home loan eligibility substantially.
- Improve Your Credit Score
While the credit score requirement for home loans is comparatively lower, it has a direct bearing on the loan amount as well as its interest rates. It is no surprise that individuals with a credit score of above 750 are eligible for a higher loan amount.
Check your credit score immediately after you decide to avail a housing loan. Check for any inaccuracies in the report which might have negative repercussions on your score. If your score is low, take active steps to remedy it before applying. You may clear your existing debt, including your credit card dues, maintain a low credit utilization ratio (CUR) and maintain an old credit line to improve your score.
- Apply for a Longer Tenor
When an individual applies for a longer tenor on their home loans, their eligibility goes up automatically. Not only does the longer tenor enhance your eligibility, but it also decreases the EMI amount. However, do keep in mind that a longer tenor will increase the total cost of your loan as interest will be accumulated for several extra months.
- Present an Additional Source of Income
Whether you are a salaried or a self-employed individual, if you have an additional source of income other than your primary income, it can enhance your home loan eligibility significantly. Rental income or side business can help the cause.
Follow these steps and avail a Bajaj Finserv home loan with maximum eligibility. Refer to leading lenders and avail home loans with not just the most affordable interest rates but also beneficial loan terms and features.