“Home is where your heart is.” Home is where you get love, make memories, and build togetherness, and happiness is at its peak. A house is a concrete creation, but a home is created with love and care. As quoted rightly, “Home is not a place; it’s a feeling.” Every individual wants to have a home they can cherish for the rest of their lives.
However, some people get the residential property as an inheritance from their family. But, some people have to work hard to be able to fit in the home loan eligibility for buying their own home. Purchasing a home is the most common investment choice, too. With all this, a lot of financial budgeting, proper planning, setting goals, and a little sacrifice go into owning your home.
Hence, the latter group of people fulfils their dream of buying their own homes with the help of home loans. However, getting a home loan in India is not that easy.
Multiple aspects affect your possibility of getting a home loan. To know them, let’s walk through the most important factors that lenders consider before they grant your application.
Important Factors Lenders Take into Consideration When Giving a Home Loan:
One of the most crucial deciding factors that lenders consider before providing a home loan is the credit score. The credit score is an arithmetic rating that determines how effectively you can repay your debt. It is a score that determines how well you are financially fit for home loan eligibility. To make it sound simple, a credit score shows how consistent and good you have been concerning the repayment of your earlier debts and credit card payments. Any legitimate financial institution may choose to lend to someone with a good credit history. A quality credit score will prove helpful to you in receiving quicker loan approval. Usually, a credit score of 750 and above is regarded as a brilliant score for getting a loan, whereas any number between 600 and 700 is considered good.
If you are paying any EMIs or existing loans at the time of taking a home loan, then your overall home loan eligibility will drop. Financial institutions normally consider those individuals who have no pre-existing loans because that means that they are financially sound and stable with no pre-existing liabilities.
A person’s age plays an important role in determining home loan eligibility. Age is one of the important factors that financial institutions take into consideration when providing consent for a home loan. People in the age group of 30 to 50 are the ideal candidates for receiving a home loan, as they have a considerable amount of work left to repay the loan.
A lot of financial institutions look for an individual’s financial stability before allowing approval for a home loan. An individual with frequent job changes tends to give a negative impression on the lender’s part while lending the loan. Most financial institutions choose individuals who have been consistent employees in an organisation for a minimum of 3 years. Your chances of getting a home loan increase when you have worked for a longer time. Also, if your track record in an organisation is not good, the financial institution may delay offering you loans.
Occupation is a prime factor for considering home loan eligibility. People with fixed incomes and consistency in jobs are given utmost preference. The workforce in public sector units and individuals in government jobs are chosen first because of their job stability. Individuals and doctors who work in blue-chip companies come second on the preference list, followed by engineers, chartered accountants, and lawyers. While granting a loan to contractors and self-employed individuals, financial institutions become quite cautious as they have a variable source of income that is not irregular.
Profession and salary turnover:
What you earn today and the estimated salary tomorrow are the two deciding elements while availing of a home loan. Your ability to repay the loan is determined by the amount of salary you earn. It needs to be proportional to your salary. Individuals with low incomes are more likely to be financially squeezed and are more likely to become non-payers. As a result, they are riskier candidates than those in the high-paying bracket.
Income of a Partner
If your and your spouse’s income is considered to meet the home loan criteria, you can apply for a joint home loan. This raises your home loan eligibility because your joint income will be considered at the time of repayment. If your home loan is accepted in the name of your wife, then you are eligible to receive lower interest rates than the normal home loan price.
Connection with a Lender
If you have a respectable and long-standing relationship with a lender, the chances of your loan getting approved increase. A stable relationship with the lender assures steadiness and trust between both the borrower and the lender.
Location of your house:
The location of your house is also a crucial factor that determines the approval of your home loan. The lender examines the credibility of the property you are planning to buy before granting the loan. If the property is highly marketable, the loan will be easier to obtain. If your house property is located close to malls, schools, and hospitals, your chances of getting a home loan approval are higher than those which are located remotely.
House Property Approvals:
The lender will first examine the house property that is being given against the home loan. If the property has any legal issues involved and the builder is at stake due to which the lender is likely to face a problem, then you are at higher risk of getting your home loan approved.
A considerable amount of down payment shall work in your favour anytime. Normally, the lender chooses a down payment of 20%. However, if it’s more, it’s still fine, as it builds confidence in your financial credibility with the lender.
Excess income, or “surplus income,” is the earnings you are left with after paying all the required taxes and settling all your other liabilities. People with excess income are called financially fit and possess a greater capacity to repay the loan.
If you are well versed in these factors mentioned here, you are in a better position to get the approval and disbursal of a home loan faster.