Do you intend to apply for a home loan?
Well! Most of us do when we think of buying a new home.
Receiving a home loan approval, however, is more difficult than obtaining a personal loan or auto loan. Several factors determine whether you are eligible for a home loan through banks and other financial institutions.
Factors Impacting Your Home Loan Eligibility
It’s important to understand these factors, as they greatly affect your home loan eligibility. Find out how these factors play a role in your prospects.
The first thing banks consider is whether you can pay back the loan. Your fixed income and other sources of earnings are the key factors in determining whether you can repay it. The chances of qualifying for a home loan depend majorly on your monthly income. An EMI of more than 40-45% of a borrower’s monthly net income usually does not qualify for approval. This is why repayment capability plays a vital role in loan eligibility.
A mortgage loan’s tenure is the length of time it lasts. For determining your tenure for a home loan, your age is crucial. Persons in their late twenties may have a very different ability to repay their loans than those in their fifties. People’s financial circumstances also vary as they age. Banks take all this into account in determining your home loan eligibility.
Qualification & Professional Experience
Your home loan eligibility is also factored by your academic qualifications. Academic and professional records that are impressive often work in your favor when applying for a mortgage. A home loan application at any bank or online is completely based on your financial stability.
Number of Dependents
Your home loan eligibility is also determined by the number of dependents you have. If you have more dependents, your likelihood of qualifying for a home loan decreases. Financial institutions determine your Fixed Obligation to Income Ratio (FOIR) before going further to sanction you a loan.
Different jobs carry a different weightage of eligibility criteria. Also, every bank and financial institution has a different take on it. For example, a salaried individual may be eligible for a different type of home loan than a self-employed individual. Also, frequent changes in your job can adversely affect your rating.
Lenders can get a good idea about your financial history from your credit rating. The credit report shows how you manage liabilities and whether you are trustable about loan repayment. Your credit score determines whether your loan will be approved. A lower credit score means a lower chance of receiving a home loan.
It is less likely that the bank will approve your home loan if you have already taken out several loans. Your appetite for debt is a key factor that banks use to assess whether you’re a cautious borrower or not.
You may use these factors to determine your home loan eligibility or get an expert’s help. PropUsers assist the home buyers and sellers at each step of their home buying to make the process hassle-free. Drop your contact details here and allow us a chance to serve you. Experience the difference!