Loan Eligibilityin broad terms means your ability / capacity to avail the loan from lenderbanks/ NBFCs. It the measurement tool of the banks to decide to lend whatquantum of funds on the basis of your financial credentials (Financialcredentials means your income, other obligations, additional source of income,etc. i.e. all financial figures associated with you), subject to your current age that decides your loan tenure. However your income and age is not the only criteriafor determining your loan eligibility. Your loan eligibility is also largelydetermined by the combination of other factors such as your employment details,banks current interest rates, type of loan and its tenure you wish to opt for,CIBIL scores and on the market value of the property.
Eligibility Calculation:
Banks/NBFCs have their own calculationfor eligibility criteria but the formula in general remains same for all, whichis:
((Netincome per month X 60% FOIR) – Obligation/Deductions) ÷ Per lakh EMI subject to market value of the property i.e. LTV
LTV– Market Value of the property X (60%-90%)
Where, FOIR stands for fixed obligationagainst income ratio and Obligation/Deductions means EMIs of other loans if anyand LTV means Loan To Value.
Your loaneligibility is the final outcome of the lowerof the two– i.e. your incomeeligibility and the LTV factor ofthe property.
How to increase the loan eligibility:
1) By adding aneligible co-applicant to the loan application.
2) By adding youradditional variable income from other sources, such as a property rentalincome, agricultural income, perks from company, etc.
3) By repayingyour existing loan and other debt obligations such as a personal loan or creditcard outstanding balance.
How do banks increase the loan eligibility?
1) By increasing your FOIR percentagefor income eligibility and
2) By increasing the market value ofthe property.
Note: Banks may consider increasingyour loan eligibility only subject to your clear profile and good CIBIL score.
As per the RBI guidelines the LTVpercentage cannot be altered/ increased to increase your eligibility againstproperty funding. However market value of the property can be increased toincrease your eligibility against property funding by adding car parking to themarket value, by adding cost of amenities (club, gym, swimming pool, garden,etc) to the market value.
OtherSurrogate products for eligibility calculation
Apart from the standard way (formulamentioned above), banks also have other surrogate products specially designed forcalculating your eligibility so as to make you eligible for the loan.
1) Banking product: Speciallydesigned only for self employed you, where your income eligibility is assessed based on your bankingtransaction history reflecting in the account statements. For highereligibility requirement you may also provide multiple bank accounts. (There isno capping on the number of accounts which can be considered). And importantlyyou are not required to submit your ITRs or financials under this product.
2) Gross Turnover Product (GTP): This product is again specially designed forself-employed you only. Under such product your income eligibility is calculatedon your Gross Profits (lower of actual or imputed) which increases youreligibility to 3.3 times higher as compared to the normal eligibilitycalculation.
3) Salary Multiplier: This is a Multiplier Product designed only for salaried you for availing your first home loans. The banks has their categorized list of companies and only those you who come under this specified bank’s companies list are eligible for this product of salary multiplier. This product does not consider any other existing obligations of you while calculating your eligibility.
By,
Loanfasttrack
Loanfasttrack is a Mumbai-based loan provider company since 2015 offering loan services in Mumbai on– housing loan in Mumbai, mortgage loan in Mumbai, personal loan in Mumbai, unsecured business loans, home loan transfer, top-up loans, and loan transfers. Loanfasttrack is a direct sales associate with leading banks namely, ICICI Bank, HDFC Ltd, Canara Bank, Citi Bank, Piramal Housing Finance, etc.
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Email – [email protected]
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