Factors That Determine Home Loan Eligibility

home loan

Knowing your home loan eligibility is extremely important. If you apply for a home loan without checking the loan amount you are eligible for, you could end up with the disappointment of a rejected application and a lost processing fee. To keep this from happening, the following article will highlight some of these factors and also give you one simple way to find out your rough eligibility amount. Let’s begin!

1. Your income.

This is probably one of the biggest factors influencing your eligibility. A general notion is that home loan provides will offer loan amounts that have EMIs not more than 40 or 50 percent of your monthly income; so basically, the higher your income, the higher your eligibility. This is why many experts suggest going in for a home loan jointly with an earning member of your family, what happens then is that the lender will consider your joint income to determine your eligibility.

2. Your age & job/business.

How old you are and your job/business also play a role in deciding your eligibility. Middle-aged applicants with a good job/business generally get higher eligibility. This is because they have stability and still have years to excel in their professional careers or take their business to new heights. This will mean higher incomes and lower risk to the lender.

 3. Credit scores.

This might not directly influence your eligibility but a higher score is always helpful. It can help you negotiate a higher loan amount and maybe even get you lowered home loan interest rates. The simple reason being that you have a good history with handling debt and that makes you worthy of a higher loan amount; so the closer to you are to a CIBIL score of 900, the better.

4. Loan to Value ratio.

LTV determines the maximum amount of financing a lender will provide based on the loan amount you need. For example, for loans up to 30 lakh, you can expect 90% of the property’s value as the maximum loan amount. This will keep decreasing as the loan amount increases. Also, it can be higher or lower depending on other factors.

5. Other factors.

Lenders might also look into factors such as your monthly obligations, the number of dependents you have, your other outstanding loans (if any), etc.

How to check your rough eligibility with ease?

If you want a clear understanding of your home loan eligibility, just go online and use an eligibility calculator. It will give you a ball-park amount you are eligible for in seconds. All you have to do is fill the simple details, which usually include your income, expenses and the interest rate of the loan. Within a few moments, the calculator will tell you your home loan eligibility so you can apply with complete peace of mind.

Hope this has been helpful and gives you the information you need to apply correctly and confidently. Good luck and all the best, all the best with your homeownership!