If your current home loan amount is restricting your financial flexibility, increasing it could help you fund essential home improvements or cover urgent expenses.

This article explains how to increase your home loan amount, outlining key factors to consider before making this financial decision.

Why Increase Your Home Loan Amount?

There are several reasons why borrowers may seek a higher home loan amount:

• Property Value Mismatch: The approved loan amount may not cover the full cost of the desired property.
• Financial Growth: An increase in income and improved economic stability may make it feasible to handle a higher loan.
• Renovation or Expansion: Home improvement projects or expansions might require additional funds.
• Reducing Dependency on Personal Savings: A higher loan amount can help preserve personal savings for other financial commitments.

Methods to Increase Your Home Loan Amount

1. Add a Co-Applicant

One of the most effective ways to increase your home loan eligibility is by adding a co-applicant who has a strong credit score and stable income. Eligible co-applicants typically include spouses, parents, or siblings.
A co-applicant’s income is also considered while assessing loan eligibility, which may help secure a higher loan amount.

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2. Opt for a Longer Loan Tenure

Increasing the tenure of your loan can lower the monthly EMI, reducing the financial burden and making repayments more manageable. Lenders may be more inclined to approve a higher amount if they perceive a lower risk of default. However, keep in mind that a longer tenure can result in higher overall interest costs.

3. Consider a Top-Up Loan

If you already have an existing home loan and your lender offers this option, you can consider applying for a top-up loan. This allows you to borrow additional funds over and above your existing loan, usually with minimal documentation and at a competitive interest rate. A top-up loan is typically available to borrowers with a good repayment history.

4. Go for a Home Loan Balance Transfer

A home loan balance transfer allows you to shift your existing loan to another lender offering better terms, such as a lower interest rate. Some lenders also provide a top-up loan facility along with the transfer, allowing you to access additional funds. However, before opting for a balance transfer, it’s crucial to assess the new lender’s terms and ensure that associated costs (such as processing fees and documentation charges) do not outweigh the long-term benefits.

Crucial Factors That Affect Your Home Loan Amount Eligibility

Lenders evaluate multiple criteria before determining the loan amount:

• Income Stability: A steady income and job security improve your loan eligibility. Lenders prefer borrowers with a reliable repayment capacity over time, making salaried professionals and individuals with a stable business history more favourable candidates.
  
• Credit Score: Most lenders consider a score of 700 or above as a positive indicator of creditworthiness. A higher score can also help you secure better loan terms, including a lower interest rate and a higher loan amount.
• Age of Borrower: Younger applicants typically have higher eligibility due to their longer earning potential, providing lenders with more assurance regarding their ability to repay.
  
• Existing Debts: Fewer outstanding debts increase your chances of securing a higher loan amount. High existing debt may raise concerns about your ability to manage additional financial obligations.
  
• Repayment Record: Lenders are more inclined to approve higher loan amounts for borrowers who have a record of timely EMI payments. Any past defaults or delays can lower your chances of approval and reduce the amount you’re eligible for.
  

Things to Keep in Mind When Increasing Your Home Loan

When considering how to increase your home loan amount, keep these key factors in mind:

• Reconsider Repayment Capability: Before applying for a higher loan amount, ensure you can comfortably manage the increased EMI. Use an EMI calculator to check if the new amount fits within your budget.
  
• Additional Costs: Remember to factor in all associated costs, including processing fees and any other fees related to increasing your loan amount. These can impact the overall cost of your loan.
  
• Documents Required: Ensure all required documents, such as updated income proof, property papers, and tax returns, are in order. Having complete documentation will streamline the application process.

Conclusion

To increase your home loan amount, consider options such as adding a co-applicant, clearing existing liabilities, or extending the loan tenure. Maintaining a strong credit score will also help. Additionally, explore options like top-up loans or balance transfers. Always assess your repayment capacity before applying.

If you're looking to increase your existing home loan amount, SMFG Grihashakti offers hassle-free balance transfers with the option to top-up your loan. Our competitive interest rates and flexible tenures of up to 30 years* help keep EMIs manageable. Apply online today or visit your nearest branch for personalised assistance.