Home Loan eligibility 101
If you’ve found a property you want to buy and realise you don’t have enough funds, it makes sense to opt for a home loan. There are quite a few factors to zero in on when talking about home loans. These include the tenure of the loan, the amount borrowed, and the EMIs.
The Eligibility Calculator for Home Loans
Banks state that as a norm, you are eligible to get up to 60 times your net income as a home loan. For example, if your salary per month is INR 50,000 then you would be allowed to apply for a 30-lakh loan.
Before your loan gets approved though, you need to have an idea about what it entails. How a home loan eligibility calculator works is something you will need to understand before going further. Your eligibility for a loan boils down to two major elements—how much you make every month and the tenure of your loan repayment period. Other factors that decide on whether you can afford to repay your loan are interest rates and your EMI installments. With lenders like Bajaj Finserv, you get online access to their EMI and loan eligibility calculators, which will help get the math done while you research home loans.
For salaried individuals, your age will also be considered when calculating eligibility. If you are within the 24 to 50 years age bracket, you will have a better chance at getting your application approved. Professionals, on the other hand have till age 65 when calculating loan eligibility.
Some financial institutions consider the city you live in, which is why location plays an important role in eligibility as well. For example, borrowers can potentially avail of larger loan amounts in Tier 1 cities, as opposed to Tier 3 cities.
What Usually Doesn’t Factor in on Your Eligibility: Credit Score
Not all institutions rely solely on credit score, but some of them do. If you have defaulted on a payment or two, the bank is going to find out about it but it may not dent your eligibility. If you are looking to borrow, then the lender will check your ability to pay, assess your intention to pay, and look into whether the property you are buying is a safe investment. Some institutions even look into credit history of families. Most institutions have algorithms of their own that they use to determine the eligibility of potential customers.
The advantage of having a calculator at your fingertips is that it tells you whether you will be able to keep up with a repayment schedule.
How can You Improve Your Eligibility?
When you take improving your eligibility for a loan, there are a few things you could do to help it along.
Increase Your Tenure
Since most borrowers have a better chance of paying lower EMIs on time, opting for a longer tenure would make sense. The EMI would decrease considerably if you choose to have more time to repay the loan. The downside to this is that you would be paying higher interest charges.
Pay off Debts
If you have any loans to pay off, then clearing them before applying for a home loan would go a long way when it comes to your eligibility. Industry standards state that any loan with more than 12 unpaid instalments should be considered before approving any other loan application.
Club Incomes Together
If you club your income with that of a spouse or a parent, you have a better shot at being eligible for a loan. Keeping your financial health in mind, financiers like Bajaj Finserv offer 3 EMI-free months, which can help you maintain financial stability after the loan is sanctioned.
Various banking and nonbanking companies offer unique privileges and incentives to home loan customers. For instance, lenders like Bajaj Finserv provide Home Loans with perks like refinancing, part prepayment facility, nil foreclosure charges, and competitive interest rates.
Good financial planning is vital when it comes to procuring loans. After all the ‘i’s have been dotted and ‘t’s have been crossed, you will find that getting your loan sanctioned would be a walk in the park.