Checking your eligibility for a home loan is an important step to take before moving on to finish the details of the home loan process. When applying for a home loan, a person must meet certain requirements, one of which is that they must be a citizen or permanent resident of India and that they must be at least 21 years old. When you apply for a mortgage loan at a bank or other financial institution, they will require a number of documents that must be presented in a specific order. These orders must be followed exactly. Let's take a look at the various things that go into determining whether or not you are eligible for a home loan, so that we can learn more about home loan eligibility:
Eligibility for a Home Loan Is Determined by the Following Factors:
1. Your age:
Your eligibility for a home loan is estimated for a specific time period that is referred to as "tenure." Your age and your ability to pay it off within a certain time frame will determine the length of your tenure. The capacity of a person applying for a loan when they are young is not the same as that of an applicant who is middle-aged or who is retired. Borrowers of home loans go through many different phases of their lives, each of which presents a unique set of challenges. During the application review process, financial institutions take such considerations into account. You will be able to overcome the challenges that people your age group face and find the simplest option that is available to you if you plan ahead and create a budget effectively.
2. Your Current Employment Status:
Your current employment situation is just as important as your income. As a borrower, you are considered more reliable if you are employed by a multinational corporation (MNC), a reputable public or private sector company, or both. Also, if you are a self-employed person, lenders are more likely to offer you a sanction on flexible terms as opposed to someone who has an unstable job or business. This is because self-employed people have more control over their income.
3. Revenue
There is no need to elaborate further on this point. The amount of money that banks and other financial institutions are willing to lend you is significantly affected, to a large extent, by your income. When you have a higher income, financial institutions are more likely to be willing to lend you more money. In order to qualify for a mortgage loan, every financial institution requires potential borrowers to meet a minimum income requirement. This, of course, varies widely depending on the profession that you choose. Your eligibility for a home loan is determined, in part, by your annual income.
4. Qualifications and Experience
The likelihood of the bank approving your application for a mortgage loan is increased if you have solid academic credentials and substantial professional experience. For instance, if you are a salaried employee, you need to have a minimum of two to three years of work experience in order to be eligible for a home loan. This is because home loans are considered riskier than other types of loans. In a similar vein, if you are an individual who is self-employed, your company needs to have been operational for a few years and have adequate cash profits and revenues. Additionally, tax returns must have been submitted using the company's legal name. Your prior work experience and academic credentials can provide a good indication of how far you will go in your career and how stable it will be.
5. Type of Employment
The kind of work you do will be a factor in determining whether or not you are qualified for a mortgage. The fact that you are salaried, self-employed as either a Self-Employed Professional (SEP) or a Self-Employed Non-Professional (SEP), or both, is important to banks (SENP). The eligibility requirements change depending on the kind of work that you do. Your ability to obtain a mortgage may be negatively impacted if you switch jobs frequently.
6. Credit Score
A credit history provides the lender with a clear picture of how you have handled your liabilities and also how capable you are of repaying the home loan. This is important information for the lender to have. Lenders will typically look at an applicant's credit history before approving a loan application; therefore, it is essential to maintain a healthy credit score at all times. Your application might be denied, unfortunately, if you have a very low credit score or a large number of loans that have already been taken out in the past.
7. Down Payment or Margin Money
You shouldn't just be concerned about the principal and the interest payments that are included in your EMI. You should also be concerned about the down payment or margin money. You will also need to make arrangements for the funds necessary for the home loan's margin money. The loan provider will only fund 80 percent of the property's current market price, which is referred to as the Loan-to-Value Ratio (LTV) (90 percent in case of home loans below Rs 30 lakhs). The borrower is responsible for securing the remaining ten percent (or twenty percent, depending on the situation) of the property's market price. Your capacity to make a down payment plays a significant role in determining whether or not you will be approved for a home loan.
8. Rates of Market Lending
The policies of the Reserve Bank of India (RBI) and the market lending/interest rates have a significant influence on the debt and advances that you have taken out. The cost of borrowing money is directly proportional to the interest rate. The value of your home loan is going to increase in direct proportion to the interest rate at which it is being accrued. To put it another way, if lending rates go up, inflation will go up, and people will be less likely to borrow money, which will make saving more appealing. When interest rates go down, it becomes more appealing to take out loans.
How to Calculate Your Home Loan Eligibility:
In spite of the fact that these parameters can differ from one lender to another and some financial institutions might have fewer parameters for you to fill in, all that you need to do is open the calculator page and type in or select the following:
Your geographic location
Your age or date of birth
Your choice of monthly net income
Your choice of additional income
Choose the term of the loan that best suits your needs.
There is a possibility that some banks will inquire about the particulars of the existing EMIs that you are currently paying.