6 Key Factors Affecting Your Home Loan Eligibility
Banks, financial institutions, and NBFCs provide a home loan as a credit facility to people wanting to purchase a home or land, construct a house on their plot, renovate their homes, or maintain their requirements. Are you aware that home loans have the longest repayment tenure of 30 years out of all the loan types? The features of home loans make it effortless for individuals to apply for a home loan after using a home loan calculator to purchase their dream homes without worrying about limited financial resources. Since home loans are available for large amounts and have expandable payback terms, lenders have stringent eligibility requirements for approving a home loan. They check your credit score based on which they offer high or low home loan rates.
Factors Influencing Your Home Loan Eligibility
Are you searching to opt for a home loan? Many people apply for one After checking the home loan rates and calculating the monthly EMIs and eligibility with a home loan calculator when purchasing a home. Nevertheless, getting your application for a home loan approved differs from other loan types, such as car and personal loans. Banks and financial establishments approve your home loan applications based on factors affecting your eligibility. Thoroughly understanding the factors impacting your home loan eligibility is important. The factors are as follows:
Credit Score and Report
Good credit score reports are among the essential factors determining your eligibility for home loans. It measures your present and past credit behavior that loan providers use to determine your creditworthiness. Loan providers prefer a credit score of 700 or more. If you have a rock-solid record of paying on time, it will benefit you, but you must complete your payments to ensure your eligibility.
Income
Another important factor that lenders consider is the applicant’s income. Home loans don’t include collateral. Therefore, banks want to know if you have a stable income source that will let you repay the loan on time. You can use a home loan calculator to check whether you can pay the monthly payments on time. The higher your salary, the more likely your loan application will be approved.
Employer and Employment Type
You might be ineligible for a home loan if you have a history of frequently switching jobs because you need a stable income during the loan tenure. Therefore, you might need more time to pay. Working for at least a year in a company before applying for a home loan is advisable. Lenders consider your employment throughout the loan approval process because, as a borrower, you’ve to pay a large monthly EMI. Lenders should guarantee that you have a stable monthly income for the entire loan duration, letting you pay on time. Lenders consider your consistent employment and if you’ve worked for one employer for a long time.
Your Age
Your age is another important factor that determines your home loan eligibility criteria. The loan provider is concerned about how many years you are left with as a salaried and working individual. Banks search for people who can repay the loan before 60 years, the average retirement age. Opting for a home loan during the early years of your career can fetch you a home loan so you have time to repay the loan. You can use the eligibility home loan calculator to calculate your eligibility.
Property Type
Banks quickly approve home loan applications for properties created by property developers with whom banks have collaborated. Nevertheless, it doesn’t mean you can not have a property of your choice. If the house is not new, there is a possibility that the lender will perform a separate appraisal, after which your lender will lend you part of the purchasing cost. It is to account for the likelihood of a structural collapse in the future. Therefore, select a new property to avert such hinders in the application procedure.
Your Debt Obligations
Multiple debts and loans are not an issue. Nevertheless, lenders are always concerned about outstanding dues and give special attention to your repayment pattern. There are concerns about missing regular EMIs, paying EMIs after the deadline, and ranging outstanding dues. Therefore, it is advisable to be disciplined with your credit repayment to get approval for a high amount on flexible terms and conditions and a nominal home loan interest rate.
Conclusion
Home loans are one of the most important financial obligations you make in your life. A small mistake can lead to financial distress. Therefore, use a home loan calculator, research and analyze home loan offers from different lenders, check the eligibility requirements and associated fees, and compare home loan rates offered by different loan providers. Look at all the options before you and opt for a home loan after meticulous planning and consideration. Ensure that the factors work for you to get a home loan at reasonable rates and take the first step to purchasing your dream home.
