Guide to Determine Your Housing Loan Eligibility from Lenders Perspective
Home loans in India involve large amounts, long repayment schedules and complex eligibility criteria. You might be earning well, but that alone doesn’t guarantee your home loan eligibility. The financial institutions follow well-defined criteria to sanction a loan and, obviously, you need to fulfil it before applying for the loan. Or else, rejections are inevitable. Let’s discuss the key factors that influence your home loan eligibility. The point is to ease your way to a home loan.
Lenders factor in your age to approve a loan and decide the tenure. A younger person often gets preference because his/her disposable income is expected to grow with time. Plus, a younger person has more years to repay the loan, compared to someone nearing his/her retirement. For instance, a 50-year-old has just 10 years to repay the loan while someone in his 30s has about 30 years left. Thus, the lender might deny the loan to a 50-year-old seeker or offer short tenure to cover the risk of a possible default. It’s advisable to use a housing loan eligibility calculator to get a clear picture of your eligibility status before applying.
Though monthly income is not the only consideration for a home loan, it’s an important one nonetheless. Suppose your monthly income is INR 50000 with which you have to provide for your family and support other financial obligations. So, a fixed percentage of the in-hand income will be determined that you can spare for the EMI. In case your financial liabilities are too big, the lender might reject your loan application outright. Feel free to use a home loan calculator India to determine your eligibility based on your total monthly income.
The lenders prefer salaried professionals over the self-employed ones. A salaried person is less likely to default because his/her monthly income is fixed. Conversely, a self-employed person’s income is subject to various external factors, and hence, varies drastically. Don’t forget to provide your employment documents besides other home loan documents when applying.
Value of the Property:
The value of the property also plays a role in determining your home loan eligibility. The lenders evaluate your property’s cost based on the existing market value, development costs, location and other parameters. Based on the appraisal, the Loan-to-Value (LTV) ratio is calculated, which ranges from 75 to 90% of the property’s appraised value. The LTV refers to the loan amount than can be sanctioned for a given property. Higher LTV means a higher loan amount.
Allotted by Credit Information Bureau of India Limited, CIBIL score is a numerical expression to determine your creditworthiness. Your likelihood of getting a home loan is high if your CIBIL score exceeds 750 points while anything less is considered undesirable. Plus, a high CIBIL score also ensures low-interest home loans at easy terms. With a desirable CIBIL score, you can expect 8.70% interest while the interest for a minus 750 score, the interest is 8.80% or above.
Remember, your home loan eligibility is subject to the above eligibility criteria. Knowing it beforehand not only saves you from loan rejections but also helps you get the better end of the deal.