A Detailed Guide to Understanding the Home Loan Eligibility
Availing a home loan is a crucial process, and there are few parameters that the home loan providers consider before approving a home loan. Here are the parameters that decide your eligibility for a home loan.
Looking for your dream home requires a lot of effort and commitment. aDepending upon your present lifestyle and your budget, you need to weigh the expenses that you would have to incur to avail a home loan. The eligibility for availing a home loan is different for every applicant, and there are several factors that determine the eligibility.
Age of The Applicant and Working Years- The present age of the applicant plays a major role in determining the eligibility for a home loan. The maximum loan tenure can be 30 years, and in that case, the maximum is the working life of an individual the maximum repayment tenure he/she can get. So, an individual at a younger age can enjoy longer repayment terms than those who are relatively older.
Financial Position of The Applicant- Your present and future income quantum plays an important role in deciding the eligibility of the home loan. The lender also anticipates your future income stability so as that you are financially capable of repaying the loan.
Existing Financial Liabilities– The lender will also check your existing debt, if any, such as car loan, credit card debts to assure that you will be able to take the additional burden with the existing loan amount.
Credit Score- A credit score is a score that evaluates your past repayment history, that is how good you were in paying your outstanding debts. A credit score above 700 is considered to be a good credit score and increases the chances of getting a home loan approval. In addition to getting a home loan approved, a good credit score allows one to bargain with the lender over the benefits and the interest rates.
Property Specifications– The home loan is approved only to those property or builder which are approved by the banks. The specifications mentioned for the underlying property needs to be adhered to for getting the loan approved. The specification may be like the size of the property, age of the property etc.
Guarantor to Some Other Loan- If you are the guarantor to some other loan then that is considered to be an existing loan of yours. If the borrower of the loan defaults, then this affects your credit score negatively. A poor credit score can make your borrowing difficult.
Personal details- Other than the above factors, your personal details such as your educational qualification, your family background also plays an important role in getting approval for the home loan.
Basis on the above factors the lender approves the home loan of the application. If any of the factors above do not meet the said guidelines, getting a home loan approval would be difficult. In a few cases, a low credit score helps you to get a home loan from certain banks and financial institution with certain terms and conditions like high-interest rate or lesser repayment tenure. So, to get a home loan approval it is necessary to improve the eligibility for the loan.