Getting a home loan is never a hassle-free process. It’s a tough time to buy a home. Prices are rising just when wage growth is in the doldrums, high demand and few homes for sale have sent prices soaring, and you’re left with obscenely unaffordable options.
When you are looking for residential home financing and want to know if you qualify with your income, you probably want something that can give you an idea about whether your chances of getting approved are good. There are several important factors that will determine if you will be a good candidate for a home loan.
Before you can qualify for a home loan, you will need to check your eligibility conditions and make sure that your financial position is strong enough to handle the monthly repayments. Thankfully, there are ways to get around this dilemma. Check out these four factors that affect your home loan eligibility and find out how to get home ownership again within your budget before you apply for a home loan.
4 Factors That Affect Your Home Loan Eligibility
If you are planning to buy a house, the first thing that comes to mind is how much loan amount you can get?
A loan eligibility calculator is one of the best tools that helps you know about your loan eligibility. It is a tool that gives you a fair idea about how much loan amount you can get.
Various factors affect the eligibility of an applicant for a home loan. These factors include income, age, employment history, credit score, and other financial aspects. Let’s discuss these factors in detail.
The income you earn is an essential factor in determining your eligibility for a home loan. Your income is the primary source of paying back your home loan, so it must be sufficient to cover the monthly installments and other expenses associated with owning a home.
The lender will check your income against the amount needed to service the loan – including mortgage repayments and other costs such as maintenance and utility bills. If you don’t earn enough to cover these costs, then you won’t be able to get a mortgage at all. If your income is below average, you may struggle to get approved for a home loan.
The lender also considers your income stability to know whether you can repay the EMIs regularly or not.
2. Credit Score
Your credit score is an individual credit report that reflects how good or bad an individual has been with their finances in the past. It also shows how reliable that person has been in paying back loans and keeping up with other financial obligations like utility bills.
A higher score shows that you are financially stable and reliable. In contrast, a low score shows that you have been negligent about your finances and might be inconsistent with paying back loans and other financial responsibilities and making payments on time.
Your credit history also plays a vital role in determining your eligibility for a home loan from a bank or financial institution. Lenders will usually use a loan eligibility calculator while assessing applications.
3. Age of the Applicant
Age is one of the most critical factors determining your home loan eligibility. A financial institution will look at your age and ask if you have enough time to repay the loan. This is because it takes time to build a credit history.
You need to be at least 21 years old to apply home loan and 24 years old if you plan on buying a property in joint name with someone else. If you are above 60 years of age, you will have to get approval from your lender before applying for a loan. This is because the income level is insufficient to support your needs and wants.
However, if you are below that age bracket, there are no restrictions on applying for a loan. The purpose of this factor is to protect you from any financial risks involved.
4. Loan Amount
The general rule is that the higher the loan amount, the higher your income should be. Using a home loan eligibility calculator, you can get a rough estimate of how much you can borrow.
If you have already bought a house and now want to take a home loan to build an extension on that house, then the lender will ask for proof of your income to calculate how much they can lend you.
For example, if you want to buy a house worth Rs 50 lakhs with an EMI of Rs 45000/- per month, then your monthly income should be more than Rs 60000/- per month so that you can cover all expenses without any difficulty.
Your eligibility will depend on four factors including your income, the value of your property, the amount you wish to borrow and the interest rate applicable.4 Factors that Affect Your Home Loan Eligibility
The loan eligibility factors mentioned above would help you calculate the initial requirement for a home loan in India. The more the assets, the more the eligibility and the offer will be better. Once you are ready to purchase a home, it’s important to understand the following eligibility criteria. This will help you pick the best loan for your needs and your budget.
So now that you know the four factors that affect your home loan eligibility, you can be one step closer to owning your own home. This allows you to make better decisions as you plan for the future and look for ways to save up for your next home. As long as you keep in mind these factors, you can quickly determine your eligibility. If anything is still unclear, remember that there are many different lenders out there—and all of them want to help you! Make sure that whichever lender you choose will best suit your needs and assist in making the process a smooth one. But don’t worry we are there for you. For more information visit our website.