As per a recent survey, the value of India’s real estate market is predicted to reach Rs.65,000 crore by 2040 from Rs.12,000 crore in 2019. This is due to several factors such as –
- Increase in demand for both commercial and residential properties.
- A significant development in infrastructure carried out in this sector by both government and private institutions.
One of the government initiatives that are responsible for increased investment in this sector is Pradhan Mantri Awas Yojana. An essential component of PMAY is Credit Linked Subsidy Scheme. The Government of India offers subsidies on home loan interest rates, which makes it easier for individuals to avail home loans via PMAY CLSS.
Even though home loans are an attractive financing option owing to such initiatives, borrowers need to meet a few conditions to ensure that their loan application is approved by their lender.
You can adopt the following measures to increase the chances of your loan being approved –
- Maintaining a satisfactory CIBIL score –
Credit or CIBIL score is a reflection of your creditworthiness. It is calculated based on your credit history, which includes information of any defaults, loans availed in the past, recent application for loans or credit card. A healthy CIBIL score has a positive impact on your lender since it communicates that you are not a risky borrower.
It enables them to approve your home loan application quickly. Consequently, a high CIBIL score also opens up scope for negotiations with the lender. A CIBIL score of 750 or above is considered satisfactory. It is also one of the critical factors for home loan eligibility. With a CIBIL score of 750, one can easily apply for a Home Loan with HFCs like Bajaj Housing Finance Limited.
- Apply for a joint home loan –
Applying for a home loan with your spouse or any of your working family members will lead to your application being processed more quickly. It is because, since the repayment burden is being split between two individuals, it reduces the chance of defaulting on your home loan EMI and in turn lowers the risk factor for lenders.
- Declare additional income sources if any –
If you have any other income source apart from your job or business, you should declare it to your lender. While approving a loan application of borrowers, lenders take into account their FOIR or Fixed Obligation to Income Ratio, which is defined as all the fixed liabilities borrowers have to meet with their monthly income.
Consequently, declaring an additional source of income will decrease the FOIR and improve your home loan eligibility. You can also use a home loan eligibility calculator to find your loan eligibility in just a few clicks to check the amount you can avail.
Aside from adopting the above measures, you should also check the eligibility criteria for a home loan asked by your lender. It will help in avoiding any confusion later on.
Home Loan Eligibility Criteria
Eligibility criteria may vary from lender to lender; given below are the primary home loan eligibility requirements –
- Age of the salaried applicant should be 23-62 years, and for self-employed individuals, it should be between 25 -72 years.
- Applicant should be a resident of India.
Lastly, one should use a housing loan EMI calculator to assess the monthly instalments and the interest component that he or she will be paying to the lender. There are several benefits of calculating EMIs before taking a home loan.
For instance, you can also increase or decrease the various factors such as tenor period and loan amount to see whether you can afford the EMI payments. It will enable you to avoid any default or financial burden.