Finding the best home loan is not an easy task to undertake. As it is not all about getting the home loan at lower interest rate but also considering its other important features attached, such as documentation process, processing fee, and pre-payment, balance transfer and foreclosure charges. In case you are planning to take a home loan in near future, you should at least once brush-up your home loan related knowledge. People save money for longer durations to take a long awaited home loan, but due to few unfamiliar factors sometimes their home loan application gets rejected. Just think how dejected they may feel because of the rejection. Therefore, it is always better to check your home loan eligibility well in advance before applying for it.
Applicant’s current net salary also plays an important role in determining his/her home loan eligibility, as well as total loan amount and tenure. Few lenders also take into account the number of dependants in one’s family. Larger the number of dependants, lesser becomes the chances of getting a home loan approved. Let’s discuss some important factors that decide your home loan eligibility.
Many important factors that decide people’s home loan eligibility are their age, financial history, credit score, other financial liabilities etc. Below are these factors, explained in detail for better understanding.
Factors that affects people’s home loan eligibility
Age Criteria – Applicants who are salaried employees between the age group of 20 years to 60 years of age can apply for a home loan. In the case of self-employed professionals, the age bracket is defined between 24 years to 60 years for them to apply for home loans.
Income Criteria – Applicants who are salaried and employed for at least two years in the current organization or if self-employed with at least five years are eligible for a home loan. Lenders claim that debt repayments should not exceed 30% of the borrower’s net salary. This confirms that the applicant will be able to pay his/her home loan securely.
CIBIL/Credit Score – An individual’s CIBIL score holds lot of importance in his/her loan acceptance or rejection. Any score above 750 and close to 900 is considered good by the lenders, as it depicts your creditworthiness and increases the chance of getting home loan with more flexibility on interest rates, EMIs, loan amount and tenure. Any default payment records, fraudulent trends will negatively impact on the applicant’s credit score which will eventually result in the home loan application rejection. Low credit score does not mean that the loan will get rejected. However, it surely makes the home loan interest rates higher.
Employer’s Status – Applicant’s credibility depends a lot on the organization he/she works. Employers of high repute and high turnover makes easy for the employee in getting loan, as most of the lenders do consider renowned companies in the loan approvals.
Financial Stability – More often known as financial history of an applicant. Home loan eligibility is often decided on the basis of past financial stability of an applicant. Maintaining good financial records is a good practice. Before applying for a home loan, lenders do check your financial record of the applicant to have a better insight on his/her present and past financial trends.
Long-Term Association with Banks – It is considered well to have long-term association with one particular bank, as long tenure means longer repayment history. Building a long-term repayment history or holding old accounts are always beneficial in getting home loan at lower interest rates.
Home Loan Eligibility Calculation by Lenders
Banks perform some of these simple steps to calculate your eligibility for home loan:
- Banks surely check your salary slips and banks statements to calculate your income level.
- Banks with then calculate your saved amount, as in this case bank assumes 30% of your income as savings. For example, if your income is Rs. 40,000 per month, so the saving of Rs. 12,000 per month is generally assumed by the lenders.
- Also, your existing EMIs will definitely make your income reduced.
- According to your saved amount, lenders perform a backward calculation to determine loan amount that could be offered to their applicants.
Generally, CAs, doctors, engineers, and public sector undertaking employees are offered lower interest rates by most of the lenders because of their stable income flow and nature of job.
Know more about Home Loan EMI Calculator
Home Loan EMI calculator is a generic calculator that allows you to calculate the EMIs (Equated Monthly Installments), monthly interest and monthly reducing balance on the basis of the total loan amount, loan tenure and applicable interest rate. Below is the graphic presentation of home loan EMI calculator from paisabazaar.com.
Before applying for a home loan, you can check that are you eligible for housing loan online via paisabazaar.com. You can also calculate your Home Loan EMI by simply submitting your loan related details like loan type, loan amount, property city, annual income and mobile number. Within few minutes our expert executive will get in touch as per your desired time to discuss all the best available deals that suits your requirements. With its EMI calculator’s sliders, you can adjust and check the required EMIs as many times, as this online tool is absolutely free to use.
However, home loan providers give first preference to borrowers who intend to buy a bank-approved property. In such scenario, approvals for the loan are often quick and the interest rates may be comparatively lower. The other aspect is the current status of the property, i.e. is the property for resale or under construction. Hence, keeping in mind these measures you can calculate and estimate your home loan eligibility, absolutely free at paisabazaar.com.