Home loans fall under secured loans where lender keeps the house as an asset. If borrower fails to do the repayment on time, lender can legally take control of the house pledged as collateral.
However, borrowers should meet home loan eligibility criteria to get their loan approved. Different financial institutions abide by their guidelines which helps them chalk out suitable borrowers. Know about those criteria from below.
Property details and profile
Location of the house plays a relevant role in setting the borrower’s home loan eligibility. A well-built, spacious house in good condition, with good transportation services carries more value.
Whereas if the house is in a rural area and requires extensive construction then its value will decrease compared to the former one. Lenders will also see if the value of the house chosen will increase with time.
Moreover, other than checking the property value lenders will see the borrower’s down payment. If it lies in 20% or above, getting a home loan from the lender won’t be a problem.
Income rate of borrower
Second most important notion of home loan eligibility procedure is the financial ability of borrower. The lender will plan EMI and loan tenor periods of borrower based on how much income they get.
Lenders highlight borrowers with stable income flow, so that they can ensure that the borrower can cover the EMI effortlessly. In case of any assistance the lender can opt to provide further benefits accordingly.
Borrower’s employment status
Lenders always check whether the employer has a fixed source of income or not. If the person is a salaried individual they will consider the monthly or yearly income amount.
In case of self-employed individuals the lenders will look into their average current income status. They might also ask for their income tax returns.
Borrower’s pending debts
Clearing existing debts is the faster way to get loan approval. Lenders will see if borrower is a salaried individual or self-employed, after which they’ll consider if they have any existing debts.
A person’s empty debt history will be a proof of their ability to clear loans. This will lower the risk factor of lender and they can rely more on approving the home loan to borrower. Another way of making this clear is the borrower’s CIBIL score history.
Borrower’s credit score
Even though credit score is not paid much heed while giving secured loans, but in some cases lenders include it under the home loan eligibility criteria. In this regard, it bears influence on the home loan EMI and tenor period. There are ways to know how credit score can determine the home loan of borrower for easier calculation.
Age of borrower
Younger borrowers are more eligible to get their home loans approved faster than older people. Lenders will focus on how many employment years does the borrower have and whether with their current payment status they can cover their EMI tenor.
The person can also use house loan EMI calculator to see their eligibility status and other details for better understanding. Besides, different lenders offer benefits if the borrower exceeds their eligibility criteria and opens the door to attractive perks. In this regard, they often give customised pre-approved offers to borrowers which make the whole procedure of applying for loans easier. You can check for pre-approved offer by simply entering your contact details, name etc.
Applying to home loans is no problem if borrower meets all the home loan eligibility criteria. However, it might vary for different lenders depending on the status of borrower. Hence going over these criteria with lender, understanding and calculating a rough estimation of home loan is a helpful approach for any borrower.
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