Criteria You Should Fulfill Before Applying for Home Loan - Loan Trivia

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Wednesday, 12 May 2021

Criteria You Should Fulfill Before Applying for Home Loan

                             


According to a report, the housing loan segment is anticipated to maintain a 22% CAGR by 2026. This growth is attributed to a competitive interest rate and a plethora of benefits offered by HFCs.


However, prospective home loan borrowers must be mindful of the factors that affect the loan disbursal. 


Checking the criteria before applying for a home loan helps to ease out the loan application process. Knowledge of the same can also help in determining the loan amount available against a particular property. 


What are the eligibility criteria for a housing loan?


Potential borrowers must be aware of home loan eligibility criteria for salaried individuals and self-employed for quick application.


Some of the standard home loan eligibility criteria are –


i) Both salaried and self-employed applicants must be Indian residents


ii) Salaried individuals must be aged between 23 to 62 years while self-employed should fall between 25 to 70 years.


iii) A self-employed individual must show a business vintage of five years


iv) Salaried and self-employed individuals must fulfil the income parameter specified by the lending institution.


Apart from fulfilling these criteria, an individual must know the factors affecting one's home loan eligibility. This would further improve the borrowing experience.


Ways to increase home loan eligibility


The following factors can help borrowers to increase their eligibility for housing loans efficiently-


a) Pay off outstanding debts


When offering a home loan, a lender measures an applicant's repayment history. As this credit form is unsecured in nature, a financial institution gives more value to the debt to income ratio. 


Ideally, this is the portion of a borrower’s income that goes into repaying the liabilities like credit card bills, EMI, etc. Hence, clearing the dues would reduce the repayment risk in the eyes of lenders. Moreover, it would increase the creditworthiness and repayment capability for easy home loan qualification.


b) Improve the credit score


Timely repayment of outstanding dues can improve the CIBIL score for a home loan. Borrowers can follow specific methods to improve their credit score like-


i) Avoid applying for multiple credit forms


ii) Pay the EMI and credit card bills on time


iii) Stay away from defaulting and loan settlements


iv) Keep a tab on credit reports as there are chances of errors.


These factors can improve a borrower’s chances of clearing home loan approval. In this regard, one can use a home loan eligibility calculator to know their credibility by entering tenor, monthly income, salary, current EMI, etc.


c) Consider co-application


Applying for a joint loan is an efficient way of enhancing home loan eligibility. From a lender’s perspective, a guarantor or co-applicant can reduce the risks of default. Moreover, applicants can receive a tax rebate through a joint application. Hence, the chances of securing a housing loan increase with a co-applicant.


d) Long home loan tenor


A longer tenor can help a borrower in gaining an affordable EMI. An extended tenor aids in maintaining the FOIR ratio. However, one must be aware of the increased interest outgo linked with a longer repayment tenor. In this regard, potential borrowers can compare different lenders offering flexible repayment options.


Some HFCs also provide pre-approved offers to make the approval process convenient. This offer is applicable on products like loans against property, home loans, etc. Check your pre-approved offer by entering a name and contact number.


The above-mentioned eligibility criteria can vary according to a lender. They can ask a potential borrower to fulfill additional requirements. Hence, keeping a tab on an updated eligibility list can prove beneficial for home loan applicants.

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