Reports from Statistic show demand for Home Loans in India has been increasing, especially after the pandemic. A Home Loan is a long term commitment and the interest rate is critical for calculating the total repayment amount.
Home Loan interest rates are determined by individual earnings, credit score and many other factors. Read this article to learn more about Home Loan rates and how housing loan eligibility helps you in this.
Eligibility criteria for Home Loans
In recent years, there’s good awareness about Home Loans, and they are more accessible than before. The borrowers are keen to know their Home Loan eligibility once they decide to opt for the loan. With proper analysis of the criteria mentioned below, computing the eligibility for a Home Loan will be easy for you –
Nationality & Age
Any Indian national residing in India can apply for a Home Loan. The age of the applicant must be 21 years; this criterion is for a salaried individual. However, it is 25 years for a self-employed individual.
Financial & Income Stability
Borrowers with consistent payment records are seen as financially stable and they get the loan approved without hassle. A financial check is conducted on salaried as well as self-employed individuals by financial institutions.
Credit Score/CIBIL Score
A CIBIL score is a summary of the borrower’s credit history and the score updates over time. Your CIBIL score is a three-digit score and 750 is admirable and highly considerable for loan approval.
Property Details
A Home Loan is attached with collateral and that particular asset is your purchased property. So lending institutions inspect the age of the property, where it is located, the value of the property, along with the value of the surrounding properties to ensure the loan does not end up being a bad debt.
How is Home Loan Eligibility Calculated?
The eligibility for a Home Loan is determined by various factors like monthly earnings, age of the applicant, monthly financial obligations, CIBIL/credit score, etc. By analysing these factors, financial institutions estimate the borrower’s repayment capacity and decide a certain amount for your loan.
Many financial institutions offer an online Housing Loan eligibility calculator on their official websites for borrowers to pre-calculate their eligibility for the maximum loan amount and the monthly instalments.
How to check Home Loan eligibility based on salary?
Financial stability is based on the income of our salary, it is given a high priority by lending intuitions. After the deductions such as EPF (Employees Provident Fund) and insurance payments, the real income is derived from the total earnings of the borrower.
It becomes difficult for salaried applicants to cope with ongoing monthly expenses, education expenses (if any), travel expenses and of course, savings to carry on. Monthly EMIs tend to add up the burden on the borrower.
Hence, some lenders consider an eligible loan amount that can be 60 times the net income earnings of the applicant.
For a salaried individual, the total monthly earnings can determine the loan amount for a particular property. If the monthly income for a serviceman is under Rs. 25,000/-, a loan amount of Rs. 15 Lakh can be approved for a property with a valuation of Rs. 40 Lakh.
Similarly, when an individual earns more than Rs. 50,000/- a month, the loan amount can rise up to Rs. 30 Lakh for the same property.
Conclusion
The dream of the borrower to purchase a desired property cannot turn into a reality if the correct loan amount is not approved or sanctioned by the lending institution. To improve loan eligibility, consider applying with a co-applicant to diversify the financial burden of the monthly instalments and other expenses.
Longer repayment tenure can help borrowers in approval. The repayment of existing loans can assist in maintaining and rebounding the CIBIL score if possible. And by sharing additional income documents or proof with lending institutions obtain higher loan amounts.
Also Read: Exploring Instant Personal Loans: No Documents Required