4 tips that can help if you need a higher loan amount
Lenders decide the loan amount based on the profile and the eligibility of the borrower. But what if a borrower needs a higher loan amount than what the lender may potentially approve? This post outlines 4 tips that can be of use to a borrower.
Every Home Loan provider in India goes by a roster of eligibility criteria’s, based on which they approve the loan applications. Factors like the credit score, age, income, existing liabilities, employment, etc., are considered while analysing the applicants' eligibility.
Alongside being the deciding factor in loan applications, the Home Loan eligibility criteria are also used to determine the loan amount an applicant is eligible for. In some cases, applicants may get an approval for a lower amount than they actually need, to purchase a home. However, there are ways to increase the loan amount.
If you are looking for a higher loan amount, here are 4 ways that might help you to get one:
1. Add a Co-applicant
A lower credit score/income are common reasons why your loan application might get approved for a lower Home Loan amount. In such cases, one of the most effective ways to boost your eligibility is to add a co-applicant. A spouse, a parent, a son, or an unmarried daughter or siblings can be co-applicants in most cases, as long as they are self-employed or salaried.
The income of the co-applicant can be combined with that of the primary borrower to increase the loan amount. The improved eligibility profile aided by a co-applicant can also help reduce the Home Loan interest.
2. Repay your Existing Loans
If you are already repaying a loan like a Personal Loan, a Car Loan, or an Education Loan, etc., try clearing the existing loans for a better chance at securing a higher Home Loan amount. As mentioned in the beginning, your income and existing obligations are vital eligibility parameters.
By closing off your existing loans, you’ll be left with more disposable income, thereby increasing your eligibility. It is understood that you are in a position to pay a higher EMI towards your Home Loan once you’re cleared of liabilities. This way, you may be eligible for a higher loan amount.
3. Increase the Loan Tenure
By opting for a longer tenure, you can reduce your monthly EMI amount. Once the EMI falls, it will be easier for you to make the payment every month. This will also help reduce the default risk for the lender, and they might be open to increasing your loan amount.
As your income grows in the future, you can also opt for a higher EMI and readjust the loan tenure to try and repay the Home Loan at the earliest.
4. Having a Higher Credit Score
Your credit score has a significant impact on your Home Loan eligibility. Improving your credit score can be an excellent solution if you need a higher loan amount.
Clearing the existing loans and paying your Credit Card bills on time without delays or defaults are some of the ways to keep a healthy credit score. Apply for a Home Loan with a higher credit score, and you might get approved for a higher loan amount possibly at a lower interest rate.
A lot of things also depend on the lender you choose for approval of the loan amount. They provide professional assistance during the loan application process, help fast-track the entire process and disburse the loan amount at the earliest.
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