Are you dreaming of owning a house but are uncertain about your Housing Loan Eligibility? You’re not alone! Many people are unaware of the factors that determine their eligibility for a housing loan. Understanding these factors is crucial to increasing your chances of being approved for a housing loan and making your dream of owning a home a reality.
Since building or buying a house is a significant investment, having a home loan can make things much more manageable. It helps reduce the financial burden and allows you to pay for everything. You can choose your tenure with a home loan and then pay back in EMIs. However, you must understand that there are factors that affect your eligibility for a home loan.
Factors Affecting Housing Loan Eligibility
Your bank considers many factors before providing you with a loan. These factors are meant to determine if a borrower can pay the loan on time. If you do not meet any of the criteria or do not satisfy the bank’s conditions, there is a high chance that they will reject your application. Therefore, you must check all the factors affecting your Housing Loan Eligibility.
Some of the factor affecting you home loan eligibility are –
Employment Status
Your current employment status has a vital role to play in how soon you get the home loan. Banks usually check the employment status of the person applying for a home loan. If you are a complete fresher, you should work for at least a year with your current employer before applying. Ideally, banks prefer a work experience of two years to approve a loan.
Before sanctioning your home loan, the bank wants to ensure you have a stable source of income. Therefore, they may check how long you have been working with your organisation. This helps them be sure that you will be able to make timely payments. The chances of getting loan approval are higher if you have had consistent employment.
Credit Score
If you have taken any loans previously, banks will usually check your credit history. This will help them become sure of your credit score. The credit score often gives the bank a fair idea of how you can handle the liabilities and make payments. Also, it helps them understand how responsible you are with your EMI repayment.
If your credit score is above 750, it indicates that you are creditworthy and will add weight to your eligibility, helping you get the loan faster. On the other hand, a poor credit score reduces loan eligibility.
Existing Debt
Having more than one loan is not a problem, but missing out on the payments of those loans may be. If you have an existing loan, the bank will check if you make a timely payments. Banks usually check information about existing loans to identify your payment pattern.
Property Details
Many banks may want to see the property’s details, such as its value and location. This makes it easier for them to decide how much loan they can provide. Home loans usually have 75-90% of the property value financing.
The property’s location also plays a role in determining if and how much of the home loan is sanctioned.
Loan Amount
Opting for a loan amount that fits with your eligibility increases the chances of approval. Experts often recommend that even when you can get a loan for higher amount, you should stick to only what you need. If you opt for a higher figure, it may be tough for you to pay the EMIs.
Missed or delayed payments of EMIs can have a negative impact on your credit score. Your loan amount also determines how much of a Home Loan Processing Fee you have to pay.
Loan Tenure
The tenure for which you want the loan may also impact your eligibility. Usually, you can take out a home loan, depending on the bank, or your needs.
The bank will often provide you with information on the tenure of a home loan. Sometimes, the bank will only guide you on how long you should take the home loan. Furthermore, tenure will also have an impact on interest rates and EMI amount.
Your Age
Banks usually take your age into account to prepare a proper repayment structure for you. They will calculate your years as a salaried or professional individual. Depending on the calculation, they will suggest how much loan you should take, or for how long.
If you take a home loan in the initial stages of your career, you will get a higher value at more competitive rates.
Conclusion
A home loan is a big financial commitment. Before taking a home loan, you need to carefully analyse what each bank has to offer you. It is only after a complete analysis that you should make a decision. You should choose a home loan that meets your requirements after having fulfilled your eligibility criteria. If you are not familiar with the process, a representative from a bank can guide you.
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