One of the first things that prospective home loan borrowers should check is the loan eligibility of the lenders.
There are certain parameters based on which the lenders evaluate the applicant’s profile, and then they decide whether to accept or reject the loan application. In fact, borrowers can also use a home loan eligibility calculator to determine their eligibility on the basis of varied parameters. This will also help them in making an informed decision regarding opting for a home loan.
Key factors that affect Home Loan Eligibility
Take a look at the factors that determine the eligibility of individuals for home loan applications:
1.The applicant’s age
The age of the applicant is also a significant home loan eligibility criterion. The lender will prefer applicants in their early careers. This is because they have more years to work and thus they can repay the loan amount conveniently. Using a house loan eligibility calculator, one can also check one’s eligibility for a particular loan. This also provides them with an idea of the tentative amount that they can apply for.
2. Credit Score
The credit score is one of the essential home loan criteria based on which the eligibility for the home loan is decided. Thus, before approving a loan, a lender always verifies the applicant’s credit score to measure their repayment capacity on the basis of their financial credibility. A score of 750+ is always considered creditworthy by lenders.
3.Income of the applicant
The income stability of an individual is another crucial eligibility factor for a home loan. As this is a high-quantum loan, the lenders expect the applicant to have a decent income and stable employment. The higher the income, the more the chances of getting a home loan approved.
4. Applicant’s Employment Status
Employment status also matters a lot when it comes to home loan approval. Applicants working in the public sector or in an MNC are considered comparatively more reliable as a borrower than self-employed individuals.
In fact, financial lenders also offer the former with flexible home loan interest rates than the latter.
5. Any Existing debt obligations
Unpaid loans and dues are always a concern for home loan lenders, severely limiting one’s eligibility for home loan approval. In fact, the lenders also make the eligibility criteria strict for those who make EMI payments after the due date or who miss their EMIs often.
So, it is favourable for borrowers to be disciplined with their credit repayments. This will allow them to get a high loan amount at low-interest rates and on flexible terms.
6. Details of the property for which the loan is borrowed and the LTV ratio
Always choose a property for the housing loan that has the potential to increase its value in the near future. Lenders view this property as security, so the loan eligibility will vary on the property type. Like if it’s located in an urban area, chances are that the borrowers will receive a higher loan amount and a reasonable interest rate.
Also, if the down payment amount is more, then this will also increase the loan approval chances.
These are a list of parameters that affect the home loan eligibility criteria. So, before finalising the home loan with any lender, evaluate the offers by different lenders and verify the eligibility criteria set by each of them. One should also check the list of documents for home loan applications.
Many NBFCs and financial lenders provide pre-approved offers for their customers on a host of financial products like loans against property and many more. This saves time and also simplifies the process of loan sanctioning. Individuals can check their pre-approved offers by providing a few basic details, like their name and contact number.
Once an individual becomes aware of these factors, they can use a home loan eligibility calculator to calculate the eligibility as well as affordability of the home loan.