Applying for a home loan and then getting it approved from a bank is no mean feat. To determine whether you are eligible for a loan or not, the bank and Non-Banking Financial Companies (NBFC) will take a lot of factors into account before signing their approval. They have certain criteria which they expect you to meet. The factors that impact your home loan eligibility are:
The capacity to borrow money:
The primary thing a bank checks before approving a home loan is whether you can pay it periodically without fail over a certain period of time. This is determined by the bank by checking your monthly income. The bank or the Non-Banking Financial Company (NBFC) will only approve a home loan that has an EMI that is equivalent to 40-45% of the monthly income of the borrower. You can also increase the amount of loan you take from the bank by presenting any other source of stable income you might have.
Age of the borrower:
The age of the borrower is another factor home loan eligibility providing entities look at before granting approval for the same. The younger you are and the farther away from retirement, the better the chances of getting a loan with a high amount.
Banks and NBFCs usually check the property’s condition for which the borrower is taking a home loan. If the property for which you are taking the loan is old, the loan lenders might evaluate it to check against any possible structural disintegration. Usually, it is difficult to get a loan for a property that has been built more than 50 years ago.
Nature and stability of the profession: Banks provide loans easily to loan seekers who are in white-collar jobs and have a stable income. Professions in the service sector like banking and aviation are considered to be safe and stable whereas a person running his own business might not be a safe option for the lenders.
A credit score is an important factor in getting a home loan approved. Before applying for a home loan you should check your credit score on the CIBIL website. If you have never taken credit or cleared your credit dues on time then your credit score will be high and your chances of getting the home loan approved are pretty good. On the other hand, if you have defaulted on your credit payments, you might face issues in getting your home loan approved.
Relationship with the bank:
Having a working account in the bank to which you have applied a home loan certainly helps in getting approval for the same. A good past record in a bank can go a long way in getting the loan approved.
Your current working organization: Banks divide companies into A, B, and C categories. If you are an employee of a company that belongs to category A, you will get the approval of the bank much easier and get the loan at a lower interest rate than others which will save you a substantial amount of money in the long run.
The number of dependents:
This is something the banks look at as well before granting approval for a home loan. If you have dependents, a certain share of your income will go towards taking care of them which will affect your monthly installment payment.
Although the points mentioned above affect a person’s chances of getting approval for a home loan from a bank, issues regarding these factors can be sorted out by getting in touch with the bank.