Since home loans are available in large amounts and comprise expanded payback conditions, lenders have set tight eligibility criteria for approving an application for a home loan. Loan providers consider multiple aspects while evaluating your home loan application status. You can use the home loan calculator to make necessary calculations and see whether you can repay the loan. Loan providers assess your employment status, income, existing loans, and credit scores before processing your home loan. Credit scores are valuable lenders put much importance on them while assessing your loan application. Compare the home loan rates before sending your application.
6 Factors That Impact Your Home Loan Eligibility
Using a home loan calculator to check affordability is essential before sending a home loan application. Six factors that impact your eligibility criteria for a home loan are as follows:
- Credit Score and Report
Your credit score and report are the most crucial factors in determining whether or not you are eligible for a home loan. Your score considers aspects such as repayment history, the number of current loans and credit card dues, and the debt type you’ve borrowed previously. Therefore, a loan provider can use the score to judge your financial and repayment ability before sanctioning an application for a home loan. In some situations, depending on your credit score, lenders decide whether they should offer you low or high home loan rates.
- Income
Another significant factor that impacts your eligibility criteria for a home loan is the average salary. Since collateral is not required, loan providers want to know whether you have sufficient income from your job and additional sources of income that will let you pay your dues every month. The more your salary is, the higher the chances of loan providers approving your application for a home loan.
- Type of Employment and Employer
If you change jobs frequently, lenders will think you are ineligible and reject your loan application because you might not have a stable income during the entire loan term and cannot make monthly payments on time. Working in a company for at least one year before sending your application for a home loan is advisable. Lenders consider your employment throughout the application process. Since you are bound to pay a massive monthly EMI, loan providers should guarantee that you will have a steady income every month for the loan tenure, letting you pay on time.
- Property Age and Type
Banks don’t take much time to approve home loan applications from estate firms with whom they have collaborated. However, this doesn’t prevent you from purchasing a property you like. If the property is not new, there is a possibility that loan providers would do a separate assessment and, after evaluation, lend you a part of the purchasing cost. Hence, you can opt for a property that isn’t much old and prevent hindrances during the application procedure.
- Borrower’s Age
Banks frequently search for borrowers who can repay the loan before turning sixty, which is the average retirement age for everyone. Hence, if you are young, loan providers will approve your loan application. Age is a crucial parameter in determining the loan tenure and your amount. Lenders prefer you’ve approximately 10-15 years of experience before retirement.
- Current Debt Obligation
Multiple debts and loans are not an issue. Nonetheless, unpaid dues are a concern for loan providers. Banks, NBFCs, and other financial institutions give special attention to your repayment pattern. Failing to pay EMIs regularly, paying EMIs after the deadline, and diverse unpaid dues are the reasons for concern for loan providers. Hence, being disciplined with credit repayment to receive a high amount of approval on flexible terms and conditions with a nominal home loan rate.
Conclusion
A home loan is a crucial financial decision you make in your life. One mistake can lead to financial distress. Hence, check around, compare the home loan rates from different loan providers, and consider other possible options before executing your financial plans. You can check your eligibility criteria by learning about the factors mentioned above. When you know you are eligible for a loan with your selected loan provider, you can calculate your home loan’s affordability with the help of the home loan calculator.
