Important Home Loan Eligibility Criteria to Stay Mindful Of

Buying your dream home today is no longer a long walk in search of the right property that fits both your needs and your budget. In today’s real estate market, your homebuying budget can enjoy a lot more elasticity, to help you buy a house that accommodates your family’s needs and desires and your financial standing.

With the help of a home loan, you can gain access to sizeable funding, not compromising on your property of choice.

Home loans today are easily available to those who want it, with highly customisable options, leaving no demographic segment behind. Be it for a small ticket size, or large, lenders only adhere to their basic eligibility requirements and offer the best possible deal to individuals who are able to successfully meet them.

However, the key to unlocking attracting home loan offers is to satisfy the lender’s basic home loan eligibility criteria, assuring them of your repayment intent, capacity, and financial stability.

One can wonder, what parameters are looked at in the guise of the eligibility check. Lenders typically check all indicators of your financial and credit habits and background, which gives them an adequate idea of current financial standing and your propensity to repay the home loan sum, in the form of EMIs.

Having high home loan eligibility doesn’t only ensure that you enjoy the best that a lender has to offer, but also makes your entire home loan approval and disbursal process smoother and hassle-free.

In this article we highlight the key markers of an individual’s home loan eligibility and how to address possible concerns, if the need arises. Read on to learn more.

Key Home Loan Eligibility Markers

The following benchmarks are what lenders expect home loan aspirants to meet, to be able to avail of sizeable sanctions at competitive interest rates. Individuals who wish to apply for home loans should understand that higher the home loan eligibility is, the more likely they will be to enjoy lower rates.

This is because individuals with poor eligibility invite high mark-ups and rates to insulate the lender against the possibility of a bad debt, should they choose to sanction the home loan at all.

Home loan applicants are advised to start looking into their eligibility criteria well before applying, so they can use the time to enhance their profile, to secure better home loan offers. Here are some aspects you should consider:

1. Credit Score

Your credit score is a consolidation of your repayment history, patterns, ongoing obligations, and debt records that tells the lender about how you handle your finances and obligations.

It also allows the lender to realistically gauge your income to expenditure ratio, accounting for ongoing EMI payments and fixed monthly obligations – to understand whether you can sustain another monthly payment, i.e., your home loan EMIs.

Home loan lenders typically prefer a CIBIL score that is 725 or higher, as it speaks well to your repayment capacity and can invite better loan offers. Aspirants should request for their credit report months in advance to identify concerns, and work towards boosting their score till it matches the lender’s requisite.

2. Steady Income

While this goes without saying, lenders will be less likely to rely on your repayment capacity in the absence of a stable income flow. In fact, reputed lenders don’t only consider your current income but also appraise your employer, to look for uncertainties and indiscretion.

A strong employer will help you secure a higher chance of a getting a low interest rate on your home loan, as your employment with them would immune to organisational upheaval or volatility.

On that note, gaps in your employment can also be a cause for concern for your lender, as they can read it as your inability to hold on to your job. However, it isn’t a deal breaker. Meet with your lender and confirm your reasons for taking time off, to allay their fears of erratic income and employment.

3. Age Band

Home loans in India are available to borrowers over the age of 23 and till the age of 62 (considered at the time of home loan maturity). This doesn’t mean that senior borrowers will be turned down for a home loan, but it can make it substantially harder for them to enjoy benefits like low home loan interest rate or a comfortable repayment tenor.

If you foresee your age as a hindrance in your otherwise adequate home loan application, consider applying for a home loan with a co-applicant, whose eligibility criteria match the lender’s requirements. This would act as an enhancement to your home loan application.

Now that you’re well apprised of everything that is looked at under the eligibility check, ensure that you do your best to satisfy the lender’s criteria, and avail of a home loan with outstanding features.