When you set out to avail a home loan there are many factors to consider. You need to decide the loan amount, tenureand a lender that can offer you the lowest rates. However, before you apply, ensure that you know your home loan eligibility. While lenders have specific eligibility criteria that help them assess your repayment capacity, you can also determine if you should take a loan by answering a few questions.
Following are a few questions that you should answer before contacting any lender for a home loan.
Do You Meet the Home Loan Eligibility Criteria?
You need to fulfill all the eligibility criteria of the lender to avail a home loan. The major factors that lenders consider while processing your loan application are –
- Age – Are you old enough to take a home loan? Do you have enough years before you retire to be able to repay the loan? These questions are important for your eligibility as they determine your repayment capacity. Ideally, you should be between the age of 18 and 65 years to avail a home loan in India.
- Income – You should have a stable income source that is sufficient to pay timely EMIs. To make things clearer, lenders set a minimum income limit that you must meet to be eligible for a home loan.
- Credit score –A credit score preferably above 700 or more is considered good in order to get a home loan. The credit score indicatesyour creditworthiness. Hence, you could face problems in getting a home loan if you have a poor credit score.
The home loan eligibility varies from lender to lender. Apart from these, the lender while processing a loan application could also consider factors such as consistency in filing Income Tax Returns, job profile, co-owner, etc.
Do You Have Job Stability?
Before you take a loan, it is imperative to ensure that your job is stable and you are not planning to switch soon. Unstable jobs or too many job changes can result in inconsistency in income sources and consequent delays in EMI payment. Lenders usually prefer borrowers who are employed with reputed organizations, government employees,or professionals like Doctors and Chartered accountants, as they usually have stability in their income.
Will You Be Able to Arrange a Downpayment?
A home loan covers around 60-90% of your house value. The rest has to be paid by you through adown payment. Therefore, it is necessary to assess if you can afford the down payment along with the loan EMIs.
Are You Ready for a Financial Emergency After Payment of EMI?
Your EMI should not hamper the payments of your other daily expenses like medical bills, educational fees, etc. Before taking a loan, it would be better to look at your monthly income, budget, and make sure you will have enough funds left to meet the other basic expenses. In addition, you might need to calculate if you have enough money for any financial emergency that you might face during the loan tenure like loss of a job, medical emergency, etc.
If you approach the lender without doing the required research and the loan application is rejected, it will have an impact on your credit score too. Hence, it is important that you look into these aspects before you approach a lender for a home loan.
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.