By Most individuals who are looking to buy houses need to rely on home loans to arrange for the finances. However, many are worried about their home loan applications not getting accepted by lenders. While it is true that lenders have rejected certain loan applications, this can be avoided by being aware of the lender’s housing loan eligibility criteria. There are various factors that a financial institution takes into account while evaluating an application for a home loan.
To improve the chances of getting a home loan approval, it is important to be aware of these factors that can end up affecting an applicant’s home loan eligibility. Read on.
- Credit history
An applicant’s credit record is a very important aspect that lenders focus on while evaluating their application for a home loan. A bad credit record could seriously hamper their chances of getting a home loan. Home loans usually involve high amounts, and any applicant that has a bad record of clearing their debt is most likely going to be rejected by lenders. It is ideal to maintain a credit score of 750 or more at all times.
- Monthly income
An applicant’s monthly income will also play a part in affecting their home loan eligibility. This is because earning a good income is vital for the applicant’s repayment capacity. If the monthly income is low or does not match a lender’s minimum criteria, their application is most likely to get rejected. While applying for a loan, it is advisable to declare all sources of income to boost the eligibility for a home loan.
- Age
If an applicant has taken a long-term home loan and they are close to the age of retirement, most lenders are likely to reject their application. This is because the applicant would stop earning an active income after retirement, and this might cause a problem in repaying the home loan’s monthly instalments. This is why it is advisable to apply for a home loan as soon as possible so that the loan can be cleared off while an active income is still being earned.
- Loan repayment tenure
A lot of borrowers are unaware of the fact that even a home loan’s repayment tenure can affect an applicant’s eligibility. By choosing a short repayment tenure, an applicant will have to pay higher EMIs. However, this becomes a risk for the lender. Choosing a long tenure would mean paying lower EMIs, which the applicant is more likely to clear off on time. So, a borrower can increase their chances of a home loan approval by opting for a long repayment tenure.
Keeping these factors in mind can help a borrower avoid getting their home loan application rejected by a lender. Also, using a home loan eligibility calculator is advisable before they go ahead and apply for home loan since it can help in understanding the loan amount that they can be eligible for.
