There are several factors a person needs to follow when they are considering a home loan. For a person, owning a house is an important task as it has an emotional angle attached to it. To make that dream successful, one needs to address some of the factors that the housing finance company will check.
For example, in the majority of home loans, a borrower gets flexible repayment options, which will help them maintain financial stability and thus make the loan payment tenure flexible and easy.
In this blog, we will examine some of the eligibility factors that one needs to consider and pass in most of the parameters so that one can get the maximum benefit out of the loan.
The Important Eligibility Factors
- Age
There is a set age limit when a person wants to borrow some amount as a home loan. A lender keeps certain parameters that that institution sets. In the majority of cases, for a bank, it’s better to lend to a young candidate who has more years remaining in the work field and can earn a significant to cover the mortgage.
However, if you are a person who is reaching their 50s and now wants a home loan, then you can face certain constraints that can affect the loan term, and you need to pay a higher amount monthly as the bank wants to close the account within the working tenure of that person.
Hence, it’s better to take a loan when you are young as it helps to give you an option for financial stability and an opportunity to plan for financial freedom.
- Income Proof
It is the proof of income of the person, which determines how much of the amount a person is eligible for the loan. It is through the use of the income statement that a lender can decide whether they can finance the home loan and the borrower in what financial condition to go for this option.
A person with a high income has a better chance of paying off the debt, and the lender can safeguard the EMI option by allowing the autopay option, where the money will be automatically deducted and used for EMI repayment.
- Credit Score
It is another vital factor that determines the eligibility of the person. An individual with a good credit score has the chance to deal with the loan as they will get the finance option easily. A person with a higher credit score is capable of paying off the loan amount.
It also shows the credit history of the person, and it allows the lender to check how responsible the borrower is with the repayment option. A CIBIL score above 750 denotes an individual with good credit practice, and this makes them eligible for a variety of options.
- Employment Status of the Individual
The employment status of a person is also important before availing a home loan. In a home loan, the amount is generally higher, and therefore, it checks whether a person has been in the work field for more than 2-3 years or not.
If an individual is in a business, then the profitability of the company has been checked, and based on that, one can get a loan of a higher amount, and the banks can thus offer flexible terms to that individual.
- Profile of the person and Property Value
The lender checks the value of the property and, based on its current market price, offers the loan to the borrowers. The DSA partners are the ones who can help in these situations and can guide the borrower regarding how to file for the value of the property.
It also checks the profile of the house and will note whether the insurance is there for fire safety and other parameters, and based on that, it can offer the loan. In an ideal scenario, a home loan covers 75%-90% of the cost of the home. The abovementioned eligibility factors determine the remaining eligibility factors.
Apart from that, certain lenders look for the current obligations a person has, and in some cases, it states that the borrower needs to make a down payment for the home loan and then can get the loan sanctioned.
