Going for a home loan is one of the most efficient and faster ways to make your dream of purchasing a new home a reality. Usually, a home loan comes into the game when individuals who plan to build their dream abode are unwilling to go all in.
Now, it is essential to know that a home loan is not just easy money lent by a bank as the prime factor, i.e., housing loan eligibility is a compulsory step to get it. With time, real estate in India is witnessing a rise in price and to be a homeowner in the current era, one usually has to avail the facility of a home loan.
What is housing loan eligibility?
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It is a set of criteria basis where a financial institution assesses whether the customer is creditworthy or not. This is basically to check whether they can avail and repay the loan amount. The two key factors of this type of loan eligibility are income and repayment capacity of the borrower. However, other factors include the financial position, age, credit history, score, etc.
What are the top five things you need to know about housing loan eligibility?
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Eligibility
The amount of housing loan you’ll be eligible for will depend on various factors such as your age, income, credit score, loan period, etc. Primarily, income plays one of the significant roles in deciding the quantum of loans. You can always enhance the eligibility by increasing the tenure of the loan as it brings the EMI (Equated Monthly Instalment) down.
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Down Payment
Interestingly, most lenders will lend 80-90 per cent of the value of the home that you wish to buy. Therefore, choosing a maximum down payment and availing of a lower loan amount is highly advisable to keep the interest burden lower. However, if this is not possible at the initial stages, opt for a higher loan amount and repay a major chunk of it in the initial period of the loan tenure. This will also keep your cost of interest of the home loan low.
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Documents
Undoubtedly, this is also a very important factor to consider. However, it’s better here that I share my personal experience. So, the documentary proof regarding your income will vary depending on whether you are salaried, professional, or a businessman. Among others, if you are a salaried borrower, the lender will ask for Form 16 or ITR for the last three years, bank statements etc.
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Credit Score Impact
Remember, your credit score is a crucial factor in housing loan eligibility as it allows lenders to offer you a lower interest rate. So, a higher credit score of anything above 750 is preferred by lenders, and you can save a lot of interest by availing a home loan at a competitive rate of interest. However, if your score is below 750, you may take the necessary steps to enhance it and then approach lenders for loans. I was lucky enough as my credit score was thankfully above 750.
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Interest Rate
This factor plays a significant role in deciding whether or not to avail of a loan and which lender to choose. We all are well aware of the fact that we should do proper research before finalising the lender. Apart from that, one should also be aware of the different types of interest rates charged by banks and housing finance companies.
Luckily, I could get my home loan with a single tap on my smartphone. No, I’m not kidding. One of my close associates told me about the Bajaj Finserv application. When I downloaded it, trust me, I deleted all the other apps I used for digital payments. So, this app is an all-in-one package and offers many services. If you wish to try it, it is easily available for download on Play Store (Android) and App Store (iOS).
I hope I have been able to give you a clear picture regarding housing loan eligibility. So, ensure that you make the right choice and keep the interest costs low.
