We always have that one big dream of owning a home, for which we strive to make it come true. But end up puzzled, realizing that we need a huge investment to realize it, especially during these pandemic days. Thanks to home loans, you no more need to wait to save up to a large sum or borrow from your friends or family. Banks and financial institutions have made it easier for borrowers to apply for home loans at ease and without much processing. However, to be eligible for a home loan, there are certain factors that a bank/ financial institution/ lender looks for. These criteria are set to ensure the repayment of a home loan. What are the various factors that determine your eligibility for Home Loan?
Factors that determine your eligibility for a home loan.
Here are the list of factors that determines for home loan eligibility.
#1 – Credit score
#2 – Applicant’s age
#3 – Employment/ profession and income
#4 – Property details
#5 – Number of dependents
#6 – Assets and liabilities of the borrower
1) Credit score
Be it any type of loan, the credit/ CIBIL score of the applicant is one of the crucial factors that a bank looks for when applying for a home loan. It is important to maintain a healthy good credit score to get your home loan approved. A good credit score is one ranging from 750 and above. People who have 700 as their credit score are also valued to get a home loan. It depends on the bank’s sole discretion as the credit score checking varies from bank to bank.
2) Applicant’s age
The age of an applicant is an important factor for approving a home loan. The younger you are, the easier it will be to get a loan approved for a longer tenure. Banks may find it risky to approve a loan for an applicant who is nearing retirement.
3) Employment/ profession and income
The repayment of a loan depends on the income stability of an applicant. Unconventional jobs which are risky and offer no security can lead to rejection of the home loan. Frequent changes in your job will also have a negative impact on the lender’s books. Hence it is required to maintain a steady income with the bank-required salary. Some banks require a minimum of 25,000 per month as income to approve a loan, while some banks even approve if the income per month is 15,000 or 20,000.
4) Property details
If you take a home loan against a property, which is very old, the lenders will come for an inspection to evaluate the probability of structural collapse in addition to their usual legal and technical inspections. Your lender might reject the loan application if the remaining years of your property till the end of loan tenure are less than your lender’s standards. There are chances of your loan getting rejected if your property does not fall within the geographical limits defined by the bank/ financial institution.
5) Number of dependents
The number of dependents will be considered before approving your home loan application. The more dependents you have, the lesser will be the disposable income, and it is likely hard to repay the loan, resulting in rejection. But if it’s just 3-4 members or dependents that you have, then the chances are high on getting the home loan approved. However, some banks would ignore this factor.
6) Assets and liabilities of the borrower
Banks need to know the existing assets and liabilities of the borrower to analyze the repaying capacity of the borrower. The more assets you have with zero liabilities, the high your chances of getting the loan approved.
So, if you are looking for a home loan with a minimal interest rate, check reputable banks home loan calculator to determine the equated EMI payments in monthly instalments.
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