Real Estate

What are the Parameters for Arriving at Home Loan Eligibility

Home loans are one of the most preferred types of financing in India to buy a property. The property can be a flat, independent home or a commercial establishment. As a borrower, you can avail upto 80%-90% of property value. Apart from the required financial assistance, an ideal lender would provide adequate benefits to the consumer. You would need to meet specific eligibility criteria to avail home loans. Knowing about these factors are vital as ignorance about the same can result in rejections. What follows are a few ways to be deemed eligible for a home loan:

Based on salary:

One of the primary parameters to qualify for a home loan is based on the pay drawn by the borrower. The lending institution will consider your net salary for assessing your loan application as the net salary will help the lender in determining the repayment structure. The net pay will not consider PF deduction, ESI, gratuity etc. and will consider only the take-home salary. Such a provision would also mean that your loan amount will increase based on the increase in pay. For example, your loan amount approved for an Rs. 50 lakhs property would be ‘x’ amount based on ‘y’ salary. If you take up a loan after a hike in your salary, then the loan amount ‘x’ would increase accordingly. 

Based on age:

Age is also one of the determining factors to be eligible for a home loan. You can avail a maximum tenure of upto 20 years which your financial partner would assess based on your age. In other words, if your age is lower; then your loan tenure is long and vice versa. Most of the banks & NBFCs allow people aged between 23 – 60 years (65, in case of self-employed) to apply for home loans and the tenure will vary based on the age of the borrower. 

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Based on CIBIL score:

CIBIL score is one of the most critical factors used to determine the eligibility for a home loan. A score is a three-digit number assigned to you based on your past debt repayments. The CIBIL score will be typically higher if you have paid your dues on time (loan EMIs and credit card bills). Alternatively, if you have missed your payments, it will profoundly impact your CIBIL score, and hence it is essential to have a good credit history before applying for a home loan. 

Value of property and downpayment:

The value of the property also plays an important part in the approval factor of the home loan, i.e. if the market value of the property is higher, you can easily avail the home loan. Additionally, if you agree to pay a higher downpayment, the eligibility for the credit becomes more likely to be approved. Use the home loan eligibility calculator to know the repayment details of your loan. 

Documentation:

Apart from the critical parameters mentioned above, if you have necessary documents in place, i.e. KYC, income proof, IT returns, property documents, and so on, then getting a home loan becomes simpler.