Factors you need to know that affect your home loan eligibility

Do you know that a home loan, with a maximum repayment length of 30 years, has the longest payback time of any loan? Because of this feature, even those with little means may easily become homeowners. This is the longest repayment time available, but lenders will still check your progress and ensure you meet all conditions to minimise their risk. This article will provide readers with a comprehensive analysis of home loan eligibility factors.

Here Are the Top 7 Factors Affecting Home Loan Eligibility

Your Age:

Lenders check borrowers’ ages to determine how many working years they have left until retirement when they receive a mortgage loan application. It’s more likely that you’ll be approved for a mortgage with preferable terms if you apply for one, two, or three decades before you want to retire. However, applying for a mortgage with fewer than ten years till retirement might be challenging. It may need more stringent home loan eligibility conditions, such as a larger down payment or including younger co-applicants.

Your CIBIL Score Currently Is:

Your credit score is a major determinant of your approval for a home loan. Lenders could use it to determine your creditworthiness and chances of timely loan payback. A credit score of 700 or above is required before one is granted a mortgage, along with meeting all other criteria. A higher credit score increases the likelihood that a mortgage lender will approve your loan application and provide you with favourable terms. Lenders typically consider the supplied CIBIL credit score. If your CIBIL score is low and you want to buy a property soon, you should work on improving it to improve your home loan eligibility.

Existing financial obligation:

If you are already making debt payments and more than half to two-thirds of your income goes toward EMIs, your application for a home loan may be rejected. Your debt-to-income ratio shouldn’t be more than 30% to qualify for a mortgage loan with good terms. No more than 30% of your monthly take-home pay should go toward paying off debt.

Therefore, while applying for a home loan, ensure your total EMI (including your home loan EMI) doesn’t exceed 30% of your gross monthly income. The home loan eligibility calculator will use your income and other factors to estimate the maximum home loan amount you may be offered. You are encouraged to wipe off prior debts and/or enlist a close relative with a high income and credit score as a co-applicant if you require a greater amount.

Your job:

You should have no trouble getting a mortgage loan if you have a stable job. Working for a respected business or public sector employer improves home loan eligibility approval odds since you will be viewed as a reliable borrower with a stable income.

How Much Money You Have:

To qualify for home loan eligibility, you must meet the minimum income standards, which vary depending on your location, the size of your loan, and your employment situation. For instance, the minimum income criteria will be higher if you reside in a metro region or Tier 1 city than a Tier 2 or sub-urban area owing to the higher cost of living in these settings. Your request will be refused if your annual income is below the threshold indicated on the application.

Down Payment/ Margin Money:

Lenders always consider the amount of money you have saved for a down payment or margin on a property. Most of the time, lenders expect a down payment of at least 10% of the property’s valuation. If a house is worth INR 500,000, a minimum down payment requirement may be INR 5,000. The loan-to-value (LTV) ratio is the percentage of the purchase price that your lender will lend you. This ratio may change based on several factors, including the location, property type and value, borrower credit history, and the potential for loan repayment.

Determine the maximum loan amount you qualify for using a home loan eligibility calculator, then save the difference for the down payment.

Variables Relying Upon It:

If you’re the only breadwinner in a big family, it might be difficult to acquire a mortgage loan for home loan eligibility. This is because calculating your ability to repay a loan takes into account less of your discretionary income if you have more dependents.

These are some of the most crucial factors determining your home loan eligibility, so you should consider them carefully before applying. The two most important factors are a borrower’s CIBIL score and capacity to make monthly payments. That’s why it’s important to focus on your credit score and learn what factors go into determining it.

Let’s look at the factors that play a role in determining your CIBIL rating.

• Major Detrimental Aspects of a CIBIL Rating
• Misuse of credit
• An unreliable track record of paying back debt
• Making minimum payments on credit cards is a common credit report error, as is not having a wide enough range of credit to qualify for the best interest rates.
• Filling out several loan applications in a short amount of time
• Taking care of the items above may help you build a solid CIBIL and boost your score swiftly.

How can you improve your chances of being approved for a home loan?

• The chances of home loan eligibility may be improved in a few ways.
• Your chances of being approved for a larger home loan increase when you have a co-applicant.
• Establishing a well-defined structure for future payback.
• Keeping one’s income stable in addition to one’s savings and investments.
• Specify in detail the supplementary income you routinely get.
• Managing all the moving aspects of your variable pay.
• Helping you fix your credit if you have issues.
• Paying off current obligations and pressing needs

Conclusion

One must be sure they qualify for home loan eligibility before applying. Evaluating whether or not a borrower satisfies the requirements for a home loan is a safe bet. Piramal Finance is one of the platforms that help you determine if you are eligible.