A home loan is an effective financial choice that helps borrowers realise their dreams of owning a house. But before accessing the sanctioned credit, individuals must adhere to the home loan eligibility norms set by lenders. These eligibility criteria cover a borrower’s income status, age, debt obligations etc., in order to determine the borrower’s repayment capability.
Not adhering to the eligibility parameters will lead to rejection of a loan application. Hence, borrowers must abide by these criteria to receive a home loan sanction letter in a seamless manner.
Factors that determine home loan eligibility
Individuals must be well-acquainted with the following factors that influence their home loan eligibility criteria.
An important parameter affecting home loan eligibility is a borrower’s income status. A steady income source acts as affirmation criteria for lenders that borrowers can make on-time EMI repayment, reducing chances of defaulting on EMI pay-outs. A borrower’s annual income determines the total loan principal that can be sanctioned. Mentioning additional income sources from rental properties, freelance projects etc., will position borrowers advantageously in fetching competitive loan terms.
Borrowers must be mindful while choosing the loan tenor. For instance, borrowers opting for a long repayment tenor will have fewer chances of defaulting on EMI payments and are likely to receive quick loan approvals.
However, borrowers must also be aware of the interest outgo and must preferably use a home loan EMI calculator to choose a suitable loan tenor.
Lenders also inspect borrowers’ CIBIL scores before approving home loans. As the CIBIL score reflects borrowers’ creditworthiness and financial behaviour, borrowers must strive to maintain a healthy CIBIL score of 750 and above.
Keeping a decent score will help borrowers get fast approvals for the loan amount and give them an upper hand in negotiating affordable loan terms. In this regard, borrowers must know how a credit score can determine home loan EMIs.
Another parameter that lenders scrutinise is borrowers’ debt obligations. Borrowers can avail of multiple loans. However, not being able to settle all the repayments on time will have an adverse impact on CIBIL score, ultimately affecting the borrower’s home loan eligibility.
Hence, borrowers must try to pay off their existing debts and short-term obligations to qualify for a considerable home loan at an affordable interest rate.
Lenders are likely to disburse high-value loan amounts to individuals who cater to the desired age limit. Individuals who are nearing the age of retirement are less likely to receive approval for a high-value loan amount. Even lenders might charge higher interest rates to older loan applicants.
The house for which borrowers are opting for loan also plays a salient role in home loan eligibility, as the property’s worth determines the loan amount. Hence, borrowers must opt for the right property. Properties located in suitable localities having adequate amenities will help borrowers access substantial funds at an affordable lending rate.
Borrowers willing to evaluate the loan amount they are eligible to borrow can conveniently use a home loan eligibility calculator. Besides knowing the eligibility norms, borrowers must also know the list of documents they need for a home loan.
Meeting these home loan eligibility criteria will also enable borrowers to reap the benefits of pre-approved offers. These offers are extended by leading financial institutions on several financial products like house loan, loans against property etc. With such offers, the borrowers can enjoy an expedited loan application process. Intending borrowers can check the pre-approved offers by submitting their names and contact details.
Thus, borrowers can avail of home loans as per their financial standing only if they cater to the predefined eligibility norms set by lenders. In this context, they must study the list of home loan eligibility criteria of respective financial institutions before settling for one.