The loan can be reimbursed over a period of time with either monthly installments or EMIs. However, various factors determine the eligibility of a home loan that need to be kept in mind before applying for one. These factors are elaborated in the following points:
- Age:
Your home loan eligibility is calculated over a set period of time known as tenure. The tenure is determined by your age and ability to repay the loan within a specified time frame. A young applicant’s ability to repay his loan will differ from that of a middle-aged or retired person. Home loan borrowers at various stages of their lives confront a variety of obstacles. Such criteria are taken into account by banks while considering applications. You may overcome the hurdles that people in your age group face with proper planning and budgeting, and making necessary financial decisions.
- Experience and qualifications:
Your chance of acquiring a home loan is better if your academic credentials and professional experience are appealing to the banks. If you are in a salaried job, for example, you’ll need at least two to three years of work experience to qualify for a home loan. Similarly, if you are self-employed, your business must be operational for at least two years and generate adequate cash profits and sales. Tax returns in the company’s name must also have to be filed. Academic credentials and professional experience are reasonably good predictors of job advancement and stability.
- Income:
There’s no need to go into detail about this. The amount of money that banks and financial organisations are ready to lend you is heavily influenced by your income. The more money you earn, the more money banks are ready to lend you. To be eligible for a home loan, a particular level of income is necessary for all banks or lenders. This, of course, varies depending on your line of work. Your salary plays a huge role in whether you are eligible for a house loan.
- History of credit and payments:
Your credit and payment history shows the lender how you have handled your debts in the past and gives them a general idea of whether you will be able to repay the loan. Your credit score is determined by your credit history. Banks use your credit score to determine whether or not to approve your house loan. A high credit score is always preferable when applying for loans. However, if you do not have a perfect credit score, there’s no need to worry since your credit score isn’t the only factor that banks consider when evaluating your home loan application.
The aforementioned points are the fundamental factors that determine your eligibility for a home loan and will assist you in acquiring one. However, there are numerous other factors that also come into play depending on the bank or lender you choose for the loan. For more information about the factors that determine the eligibility of a home loan, you may contact our experts.
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