Are you looking to avail a home loan? Most young Indians take up one when buying a house. However, getting your request for home loan approved is not as easy as other types of loans like personal loans or car loans. Banks and other financial institutions approve your loans based on a few critical factors, Factors which affect your home loan eligibility.
Factors that Affect your Home Loan Eligibility
An in-depth understanding of these factors, affect your home loan eligibility, will help you make them work in your favor. This article sheds light on the factors that influence your prospects.
-
Repaying Capacity
As a funny quote says, “To get a loan, you have to prove that you don’t need one.” This is very true when it comes to availing the best home loans. The first factor that banks check is whether you have the means to repay it. This depends on your income and other means of revenue. Your tentative eligibility is highly dependent on your monthly salary. Typically loans with monthly EMIs of more than 40-45% of your net income per month do not get approved. So repaying Capacity is one of the most important factors in loan eligibility.
-
Age
The period for which you take a home loan online or at any bank is called the tenure. Your age plays a crucial role in home loan eligibility for determining your tenure. The ability of a person in his late-twenties to pay back the loan is vastly different from that of a person in his fifties. Also, different financial requirements arise at different stages of life. Banks consider all these factors while determining your eligibility.
-
Academic Qualification and Professional Experience
Academic Qualification is also one of the factors which affect your home loan eligibility. Impressive academic and profession records tend to work in your favor while sanctioning your home loan. For instance, if you have been doing business for more than three years or employed for the last three years, then you are likely to be approved. These two factors determine your financial stability when you apply for a home loan online or at any bank.
-
Financial Dependents
The number of dependents you have in your household affects your home loan eligibility. More the number of dependents, lower are your chances of eligibility. Most banks and other lender calculate the FOIR (Fixed Obligation to Income Ratio) before sanctioning your request.
-
Nature of your Employment
Different jobs have different eligibility. For instance, the home loan eligibility of a salaried individual varies from that of self-employed entrepreneurs. Also, remember that regular changes in your job can adversely affect your ratings.
-
Credit Rating
Your credit rating gives a fair idea to lenders on your financial history. It specifies the way you handle liabilities and whether you can be trusted to pay off the loan. Banks decide whether or not to approve your loan based on your credit score. Lower the credit score, lower are your chances of home loan eligibility.
-
Number of Loans already availed
If you have already availed several loans, the probability of the bank approving your home loan is less. Banks use this factor to determine if your appetite for debt is high or whether you’re a cautious borrower.
-
Down Payment
Most banks approve home loans only for 80 percent of the current value of the property. The rest must be borne by the borrower. The down payment you’re able to pay upfront has a huge impact on your loan sanction.
Ensure that these factors work in your favor to get the best home loans and take the first step to own your dream house.
