With repetitive repo
rate cuts by the RBI, the interest rates of home loans have gone down in recent
times. This has encouraged many individuals to finance the purchase of a
property of their choice. According to a TransUnion CIBIL report, the inquiries
for home loans rose by 9.1% in November 2020. However, the lending institutions
have also enforced stricter home loan eligibility criteria to counter the risk
of defaults.
The home loan eligibility
criteria vary across financial institutions. Therefore, before availing of a
home loan, one must carefully check the eligibility requirements to ensure
faster approval. Some crucial factors can influence the housing loan
eligibility of a borrower significantly.
Individuals should
carefully assess these factors and try to improve them.
Five factors that
determine home loan eligibility
Here are the top five
factors that can affect the eligibility of housing loans –
Age
A home loan is a
high-value advance that requires several years to be repaid. Therefore, lenders
will consider the borrower’s age while approving a loan. Lenders will chalk out
a repayment structure for an individual depending on the number of years left
as a salaried or working professional.
Younger applicants
tend to enjoy better loan terms and quicker approval since they have more years
of employment left.
Credit score
Credit score comes
with crucial information about one’s repayment history, loans, and credit card
dues, several defaults, etc. Lenders assess the creditworthiness and financial
credibility of an individual with this score.
A high credit score
ensures higher chances of loan approval. Usually, financial institutions prefer
applicants with a credit score of above 750.
Income
Depending on the city
or town you reside in, every lending institution will set a minimum income
criterion. You should meet this criterion to be eligible for a housing loan
from the lender. For instance, borrowers living in metropolitan cities will
have to meet stringent stipulations in terms of income. The yearly income of
the borrower will determine the loan amount that he/she will be eligible to
borrow.
Employment status
In addition to income,
lenders also consider the employment status before sanctioning a home loan.
Individuals working in an MNC or a public sector company have higher chances of
getting their loan approved. Moreover, lenders also prefer self-employed
individuals with stable businesses and incomes.
Existing financial commitments
While having multiple
loans and debts is not a cause of concern for the lenders, it is the repayment
pattern that matters. Missing EMIs, paying EMIs behind the scheduled date, and
numerous unpaid dues will reduce the chances of loan approval.
Therefore, borrowers
need to pay their dues on time to increase the chances of loan approval.
Calculators for home loan eligibility
Various leading
financial institutions provide an online home loan eligibility calculator,
which can help determine the exact loan amount a borrower is eligible to avail.
A borrower needs to input information regarding personal and income details in
the relevant fields to initiate the calculation.
These online
eligibility calculators are free and can be accessed anywhere. Individuals can
also alter and adjust the values to find a home loan financing solution of
their preference.
Documentation required to prove home loan eligibility
Home loan eligibility
and documentation go hand in hand. One has to provide valid and relevant
documents to support his/her home loan eligibility. Make sure to provide the
following documents while applying for a housing loan –
1.
Documents required for identification – Government photo ID
proofs like Voters’ ID card, PAN card, Aadhaar card, passport, driving license.
2.
Income-related documents – Salary slips for 2 months, bank
statements for the past 6 months, IT return slips for the past 3 years.
3.
Documents’s business for self-employed individuals.
4.
Property clearance certificates and other legal documents.
Several HFCs provide
pre-approved offers to help borrowers streamline their home loan applications,
without having to undergo complicated documentation. These offers are available
on various financial products like housing loans, loans against property, etc.
To check your pre-approved offer, simply provide your name and basic contact
details.
Borrowers should look
to improve on these factors to avail of home loans in a hassle-free manner
against convenient terms.