Skip to main content

How to get a bigger Home loan?

A few tips to help you get a higher home loan amount

In the present scenario of tightening credit, banks have become more cautious while lending. The margins have increased. Banks need greater security. While arriving at eligibility for a loan, a bank looks at the ability of the borrower to repay the loan and the safety of the loan. The concern is whether the borrower would be able to repay the loan along with the interest as per the agreed time schedule.

The tools adopted by banks to assess borrowers are many and varied, and differ for different banks. The bank attempts to minimise its credit risk.

In order to be eligible for a housing loan, a number of factors are taken into account. Primary among them is the income of the borrower. Apart from income, age, number of dependants, qualifications, assets and liabilities, stability and continuity of employment, past repayment record etc are also considered to assess the repayment capacity.

There are a few ways by way of which you can enhance your eligibility for a loan. A bank recognises these additional sources of income and will club them with your income, thereby enhancing the eligibility for the loan.

These include:

OTHER SOURCES In the case of a salaried person, if he has some additional sources of income, they may be considered by the bank. The pre-condition is that the source of income should be regular in nature rather than being ad hoc or one-time.

SPOUSE’S INCOME In case your spouse has an income source, you should include her as a co-applicant. The additional income of the spouse will be included to enhance the applicant's loan eligibility. In case there are co-owners, they must necessarily be co-applicants.

If an individual is staying with his parents, the incomes of the parents may be clubbed, subject to certain conditions.

Some banks allow inclusion of a fiancee's income for sanctioning the loan along with the applicant's income. However, the catch is that the disbursement of the loan is done only after the applicant submits proof of his marriage.

ADDITIONAL SECURITY In some cases, if the applicant can provide additional security, he may have his loan eligibility enhanced. The additional security may include instruments like bonds, National Savings Certificate, fixed deposits and LIC policies. All these may also help enhance eligibility of the loan amount. Normally, investments in shares are not considered for this purpose.

TRACK RECORD In case the applicant has taken a loan from a bank in the recent past, the bank also considers the repayment record. A good repayment record also enhances the eligibility of the loan amount.

GUARANTOR Many banks waive off the requirement of having a guarantor. However, if you can provide a good guarantor, it will enhance your credibility with the bank and will thereby enhance the eligibility for the loan.

The final amount to be sanctioned will depend on the repayment capacity of the individual. This appraisal only sets the maximum limit which an individual can get as a loan. The amount that the applicant will be ultimately entitled to will have to conform within the limits fixed for each category of loan.

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now