Increase Existing Home Loan Amount
Lending institutions usually decide the quantum of the loan depending on the applicant’s profile and eligibility. Every bank or finance company approves Home Loan applications based on certain parameters, such as credit score, age, income, existing liabilities, and employment, among others. This also helps them determine the loan amount that can be sanctioned. In some cases, applicants may secure approvals for much lower principal sums than expected, which could potentially hinder their property purchase plans.
In such cases, applicants can try and enhance their profiles in terms of credit, income, and financial parameters, among others. It is advisable to work upon your profile before reapplying to enhance your chances of a better Home Loan offer.
Ways to Increase Your Home Loan Amount
When you seek a bigger loan amount, here are a few things that should be kept in mind:
1. Maintain a Good CIBIL/Credit Score
Upon receiving a Home Loan application, lenders will first check the credit score to assess an applicant’s creditworthiness. Generally, a good score of 750 and above is a pre-requisite for availing of higher loan amounts along with competitive interest rates. Individuals should always ensure timely loan repayments to achieve an excellent credit score. If you pay your credit card dues and monthly instalments on time, it reflects positively on your credit records. On the other hand, repayment delays or defaults will affect your credit score adversely. A low credit utilisation ratio also benefits your credit profile.
2. Consider Joint Home Loans
Co-borrowing is an effective way to increase your Home Loan amount. When you apply for a housing loan with financial co-applicant, who has regular sources of income and an ideal credit score, it not only fetches a preferential loan principal but also eases the repayment burden, maximises tax benefits, and increases EMI affordability.
3. Extend the Home Loan Tenor
Extending the Home Loan tenor may help in some cases, as a longer repayment period allows for relatively smaller EMIs – which may be better suited to your monthly income and affordability. In such a case, the applicant showcases greater capacity to repay the loan without defaulting, thereby enhancing their chances of being sanctioned a larger sum.
4. Clear Other Credit Liabilities
Existing obligations occupy a share of your repayment capacity and, thus, can impact your loan application adversely. For instance, if you have a personal loan, you will need to bear its EMIs, which will allow for lesser room to pay your Home Loan EMI. Thus, to maximise your chances of availing a sizeable Home Loan, it is prudent to clear existing obligations before applying.
5. Include Additional Income Sources
Ensure you include all your earnings, such as rental income and investment dividends, to try and showcase a higher eligibility.
6. Opt for a Hefty Down Payment
Lenders normally provide housing finance up to 75%-90%* of a property’s value, while the rest of the cost must be borne by the borrower. A heavier down payment can get you larger loan amounts with a significant reduction in the interest outgo.
