Home loans are easily accessible financing options in India when it comes to property buying. Borrowers can avail funds of up to 70% to 80% of the property’s current market value.
What is home loan eligibility?
Every home loan borrower needs to meet the eligibility criteria of a bank that is required to qualify for a home loan. This is like a security for the bank that he/she can repay the loan amount effortlessly without defaulting. For the borrower’s satisfaction, before starting the home loan process you must check if you will be able to pay the EMI’S of the home loan. To do that without any hassle, the borrowers can use the Home loan EMI calculator which is a very helpful tool. The home loan EMI calculator works using a mathematical formula and yield efficient results in the wink of an eye.
If you fail at meeting the eligibility criteria that may lead to rejection of the loan application, which ends up leaving a negative mark on the individual’s credit profile. So, keep in mind that you need to ensure to complete the processing faster and smoothly by fulfilling the required eligibility criteria.
Home Loan Eligibility Based on Salary
One of the important eligibility criteria that determine the amount of loan that an individual can avails is the salary in the hand of that individual. In the case of a bank, loan salary plays a crucial role as it helps in forecasting your repayment capabilities.
When it comes to salaried applicants your income will determine the loan amount you are eligible for. Banks will exclusively consider your take-home salary, minus some common deductions such as gratuity fund, PF, ESI, etc. The monthly take-home salary will determine the amount of EMI that you can afford and thus the total loan amount you can borrow.
For instance, if your monthly salary is Rs. 25,000, the maximum amount of home loan that you can avail is as much as Rs.18.64 lakh as a loan to buy a residential property worth Rs. 40 lakh and this is on the condition that you have no existing financial obligations. But if your monthly take-home salary is Rs. 50,000, the maximum amount for loaning can be Rs. 37.28 Lakh for the same property. Similarly, if your monthly take-home is Rs. 75,000 this can increase your eligibility to avails a higher loan amount of Rs. 55.93 Lakh.
Home Loan eligibility based on age
Age is another very prime determining factor when it comes to loan tenure. The maximum tenure that can be availed by a borrower in mostly 20 years in most of the banks.
In some cases, you may be able to avail of a longer repayment tenure if you are of a lower age. You can also avail of a home loan of higher value in case the income that you earn is considerably high.
Applicants on a salary basis have to be between the ages of 23 and 62 years to apply for a home loan whereas self-employed applicants, that is, who own a business have to be within the age bracket of 25 and 70 years to avail one.
What is an eligibility calculator for a home loan?
An easier way to check home loan eligibility is by using an online calculator. The Home Loan Eligibility Calculator instantly computes the amount that can be provided to the borrower. It helps in better financial planning which ultimately reduces the chances of application rejection. This tool also plays a major role in eradicating the hassle of manual calculation.
How is home loan eligibility calculated?
The eligibility calculator functions on a basic mathematical formula to evaluate the eligible loan amount. It takes into consideration factor-like loan tenure, net monthly salary, existing obligations or EMIs, other monthly incomes, etc.
What factors determine home loan eligibility?
Several factors determine a borrower’s eligibility to avail of a home loan. A few of the major factors are as follows:
- Age Bracket: Self-employed applicants who own their own business should fall within the age bracket of 25 to 70 qualify to apply for the loan. The individuals working on a salary basis must age between 23 and 62 years to be eligible.
- CIBIL Score: CIBIL score is a 3-digit value which signifies the creditworthiness of an individual. On the scale of 300 to 900, 750 is considered as the minimum rating required to qualify for a loan. A healthy CIBIL score for Home Loan can be beneficial to avail attractive features and better interest rates.
- Occupation: People applying for a home loan must either be self-employed like being a businessman or salaried in any private or public sector company or a multinational firm.
- Minimum Earnings: Many home loan banks bring a slab of net income per month based on the location of residing. The home loan applicants must meet the minimum requirements as applicable.
- LTV and Property Value: The chance of getting a higher loan amount is elevated highly if the property’s market value is higher. By making a 20 percent down payment, the process of home loan sanctioning can become faster.
An eligible applicant can enjoy affordable home loan interest rates along with various features like part-prepayment, foreclosure, balance transfer facility, etc.
How can you enhance home loan eligibility?
Increasing the tenure period of the home loan makes you more eligible for a higher loan amount as the EMIs exponentially reduces. The interest is payable, however, increases.
The easiest way to enhance your home loan eligibility is by paying off your existing debts, including loan EMIs, credit card dues, etc. It brings your FOIR down, which results in making you more eligible for a home loan.
If you are applying for a joint home loan with a co-applicant then that enhances your eligibility to borrow a higher amount.
How to utilize the eligibility calculator?
It’s quite easy and handy to use the Eligibility Calculator provided on the online websites of different banks. All that the user needs to do is simply enter all the details as required, including the date of birth and residing city.
Step 1: Enter the date of birth in the format of DD/MM/YYYY.
Step 2: Provide the place you are residing in.
Step 3: You have to set a net monthly salary either by directly entering the amount or by adjusting the bar provided.
Step 4: You have to set your preferred tenure period up to 240 months as per your financial plans and repayment capability.
Step 5: If there is any other source of income then enter details of other incomes per month. You can skip this step if you don’t have other income sources.
Step 6: Provide the total amount of installments you are currently paying for the repayment of your existing debts. Avoid if there’s none.
Make sure that is the borrower you are providing accurate information to compute the correct results. You need to recheck all the entries and click on the button of ‘check your eligibility’. The calculator displays the maximum loan amount that can the loan borrower can be provided with instantly.
Adjust the bar for any other feasible tenure periods and check the amounts you can avail of. Once you get a hold of the maximum eligibility amount that is when you can apply for a Home Loan as per your needs.