By Are you planning on getting a home loan? If yes, your first step in the process should involve checking if you qualify. The easiest way to do this is by using the home loan eligibility calculator offered by various lenders. It enables you to ascertain your qualification instantly without any hassle.
It is an essential part of the procedure as banks, and financial institutions have stringent parameters to evaluate your application. Being prepared is the only way to pass their verification and get your loan approved. It is also an excellent means to plan for the biggest financial responsibility. It helps to know the factors affecting your eligibility for guidance.
Here are some of them:
Age: It is an indicator of how many years you have left to repay the loan. As home loan comes with a tenure of up to 30 years, it becomes an essential factor. If you qualify for the loan by a bit of chance, lenders adjust the risks by extending the loan period and instalments. But if your age does not allow for it, it automatically impacts your eligibility.
Credit score: It depicts a clear picture to the lenders of how you handled your past financial obligations. Your timely repayments and debt clearance show your financial credibility, which is used to calculate home loan eligibility. You must have a credit ranking of 750 or above to avail of the loan. Hence, make sure to check this beforehand and fix it before applying for the same.
Income: It is the main component considered for your home loan eligibility as you pay your equated monthly instalments with it. The criteria differ for the salaried and the self-employed. It also varies depending on your location as metro cities have higher income compared to rural areas. Lenders usually assume that 40-50% of your payment will get contributed towards the loan. So, having higher revenue helps you get better deals and determines if you qualify.
Employment status: Your earnings can include fixed sources and variables. For instance, you are allowed to have your investment returns, rental income, dividends, etc., in your income. However, your primary and fixed source is always through your employment. Therefore, lenders check the nature of your work and its stability to understand your financial standing.
Existing financial obligations: Your current EMIs show your income distribution to the lender. If you have too many loans, credit card dues and other commitments, it negatively affects your debt-to-income ratio. Hence, it is essential to clear them before you apply to have a reliable income for repayment. This increases your eligibility for home loan.
Dependants: It refers to your spouse, parents, children, etc. It is also an aspect that most lenders consider while deciding your home loans eligibility. This is because the number of dependents you have affects the disposable income you have.
